Airports, oil cos to turn the heat on Kingfisher
The crisis-hit airline owes airport operators and state oil companies Rs 1,300 crore
Even as the crisis-hit Kingfisher Airlines (KFA) cancelled 40 more flights on Friday at the risk of displeasing more fliers, the airline is under pressure to pay up its dues, the most outstanding of which are owed to oil companies and airport operators.
Sources revealed that the net dues, which Kingfisher has to pay to Bharat Petroleum (BP), Hindustan Petroleum (HP) and Indian Oil Corporation (IOC), are more than Rs 900 crore. While HP and BP have already terminated their services to KFA -- over non-payment of dues to the tune of Rs 650 crore and Rs 250 crore respectively -- IOC has put the airline on cash-and-carry basis. Incidentally, the issue with BP is in court. But the oil companies are not the only ones that are getting impatient with KFA's arrears.
After being grilled by the top three petroleum giants, the airline may get another blow from the airports, which have also decided to supply fuel to it on a cash-and-carry basis, or in other words: no credit, just pay and operate. Sources closes to airport operators told MiD DAY that Kingfisher owes more than Rs 400 crore to different airports in the country. The dues owed to private-run airports in Mumbai, Delhi, Bangalore and Hyderabad together amount to around Rs 180 crore.
"The dues remained an issue between the airline and the airport operators. When the airports apprised the aviation ministry of the matter, the airline was asked to clear the dues on time. It is not just one, but most airports have large amounts pending with KFA. The airline owes Rs 90 crore each to GVK and GMR that operate Mumbai, Bangalore, Delhi and Hyderabad airports. Further, it owes about Rs 220 crore to the Airport Authority of India (AAI) alone," said a top source close to one of the airport operators.
It has been reported that more than 100 pilots have quit the airline in the last two-three months due to non-payment of salary. The pilots are quitting at a time when the Indian aviation industry is growing at a fast rate and is thereby running short of pilots. Sources also revealed that most of the pilots are joining a private low-cost airline, which has recently emerged as one of the biggest aviation players in the country.
According to reports, the loss-making airline has not made profits since its inception in 2005. It is running into a debt of Rs 7,057.08 crore as of March 31, 2011 and reported a loss of Rs 1,027 crore for 2010-11.
Sanjay Aggarwal, CEO, Kingfisher Airlines, made the following points in a statement in defence of the airline:
* To counter the pressures of high costs and low yields, Kingfisher decided to rationalize network, drop unprofitable flights and expedite its fleet reconfiguration.
* The reconfiguration initiative will reduce the number of fleet configurations from 7 to 3
* As per the revised schedule, it will offer 300 daily flights connecting 54 cities as compared to its previous schedule of 340 flights
* We reached out to all our guests who were booked on these cancelled flights to re-accommodate them. We offered full refund to those who so desired. We apologize to the guests who might have been inconvenienced.
* The attrition of 100 pilots did not happen overnight. Kingfisher has sufficient number of pilots and a robust pipeline of new pilots to continue to operate its scheduled flights.
* Kingfisher has not made any bail out request to the government. We have only asked our banks for an increase in limits.
* There have been a few days delay for the last 2-3 months in payment of employee salaries. However, all employees have been paid in the month the salaries were due.
* Kingfisher does not see any risk to its future or long term viability. The whole Indian Aviation Industry is struggling due to high costs and lower yields. We are no exception.
* In hindsight, we should have informed (DGCA about flight cancellations) and we apologised to them for the same.
On the possible bailout
Captain akram baigh, Aviation expert
The government must not take any decision in haste. It should focus on its own airline, which is struggling to survive.
Captain d s mathur, Former AI MD
The minister should make his house strong before doing charity.