Kingfisher SOS to govt, HPCL

With no immediate relief forthcoming from banks, Kingfisher Airlines chairman Vijay Mallya has written to civil aviation minister Ajit Singh that without a temporary bank overdraft for working capital, it would not be able to maintain normal operations. He also expressed concern that if dues to aircraft lessors are not paid soon, the leased aircraft may need to be grounded. The airline has also sought a 15-day credit from Hindustan Petroleum Corporation to meet its fuel requirements.

Written by Nirbhay Kumar

January 10, 2012 01:35 IST

With around 300 of its pilots serving notices to stop flying, the airline is staring at a crisis. Meanwhile, companies which have leased planes to Kingfisher have moved court in London as dues have piled up. An adverse ruling could force the airline to ground several planes.

?Our lessors have gone to court in London against non-payment of lease rentals. If we don’t clear dues, our aircraft will be grounded,? Mallya wrote to Singh requesting help. In the letter, seen by FE, he also recounted his earlier meeting with finance minister Pranab Mukherjee for help. The letter to Singh assumes significance since he has said no airline will be allowed to wind up due to the financial crisis.

Burdened by debt and losses, Kingfisher has grounded nearly 15 planes for reasons ranging from maintenance, lease rental delays and reconfiguration of seats. Last week, the Directorate General of Civil Aviation found several lapses in the airline?s safety compliance during a financial surveillance audit.

An email query to Kingfisher was unanswered till the time of going to press.

Kingfisher has cancelled 50 flights from its daily operations, maintaining half of 418-daily flights approved by the regulator. Squeezed by poor cash flows, the airline has failed to pay interest on a Rs 1,500-crore loan from the State Bank of India, forcing the bank chairman to call it a non-performing asset.

Kingfisher Airlines owes its lenders Rs 7,057 crore. Every month, a significant amount goes towards interest payment, estimated at 20% by aviation consultancy Centre for Asia Pacific Aviation. In contrast, Jet Airways, which operates a fleet nearly double the size of Kingfisher, spends just 6.5% of its revenue on interest payment.

The airline posted a net loss of Rs 468 crore in the quarter ending September 30. Its annual loss ending March 2011 stands at Rs 1,027 crore.

This article was first uploaded on January ten, twenty twelve, at thirty-five minutes past one in the night.