New Delhi: Kingfisher Airlines Ltd offered employees posted at airports an emergency stipend of Rs 5,000 each after failing to pay salary to its workforce for two successive months owing to a cash crunch. All three big domestic carriers Jet Airways (India) Ltd, Air India Ltd and Kingfisher have been forced to delay salary payments to staff, reflecting their dire finances. The airlines are also struggling to reschedule payments with various vendors to whom they owe money.
On Saturday, Kingfisher chief executive Sanjay Aggarwal told employees that the airline can’t pay them in full immediately, as promised earlier.
“As communicated to you earlier, we were on track to disburse salaries this past week. Unfortunately, we got hit by a couple of large unanticipated payments which had to be addressed on an emergency basis,” Aggarwal wrote in an email to employees.
“It will, therefore, take us another week before we are able to complete the salary disbursements,” he said in the 11 February email, which was reviewed by Mint. “For some of you working at the airports, who needed immediate assistance, we have arranged for a cash advance of Rs 5,000. This will hopefully provide some support in managing your personal affairs.”
Other employees who needed similar assistance were told to contact their supervisors.
Kingfisher Airlines has approximately 7,000 employees and its monthly wage bill stands at Rs 40-50 crore.
Kingfisher, controlled by liquor tycoon Vijay Mallya and saddled with about Rs 7,500 crore debt, is in the middle of raising funds to stay in business. The carrier has cancelled around 50 flights a day since November 2011 to cope with the cash crunch.
Kingfisher hasn’t made a profit since its inception in 2005. It incurred a loss of Rs 1,027 crore in the year ended 31 March on a revenue of Rs 6,496 crore. Following a debt recast, a consortium of 13 lenders took a 23.21% stake in Kingfisher in April.
The Kingfisher spokesman declined comment.
Aggarwal, in a series of emails written by Kingfisher management to employees to remain motivated despite not being paid, said the airline continues to be in discussions to raise funds.
“We are in serious discussions with several potential investors and expect to recapitalize the airline in the very near future,” he wrote in the email. “Let us ensure we put our best foot forward to ensure these investors see our resolve and attitude even in these difficult times.”
The airline’s entry into the oneworld alliance has also been delayed because of its financial constraints. Kingfisher was to join the alliance on 10 February.
“We agreed with Kingfisher Airlines that it was in our collective best interests to defer its joining date until it had made an additional progress towards its financial goals,” Michael Blunt, a New York-based spokesman for the oneworld alliance, said. “We will establish a new joining date with Kingfisher Airlines in due course, hopefully as soon as possible.”
Mohan Ranganathan, an aviation safety expert, termed the latest email written by the management as “ridiculous”.
“If they expect that an employee will be in the correct frame of mind while operating a flight when he is in deep red, the airline has lost its plot,” he said.
Shares of Kingfisher Airlines rose 0.19% to end trading at Rs 26.85 on BSE. The benchmark Sensex was up 0.14%.
tarun.s@livemint.com