Mallya assures staff of Kingfisher revival; bankers sceptical

Mallya says he is expecting some positive developments to happen in coming week; ready to clear salary dues
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First Published: Fri, Mar 22 2013. 11 50 AM IST
Kingfisher Airlines chairman Vijay Mallya is likely to infuse `750 crore into the airline once the stake sale in United Spirits is complete. Photo: Getty Images
Kingfisher Airlines chairman Vijay Mallya is likely to infuse Rs.750 crore into the airline once the stake sale in United Spirits is complete. Photo: Getty Images
Mumbai: Kingfisher Airlines Ltd chairman Vijay Mallya said he is expecting “some positive developments to happen in (the) coming week starting Monday” and is ready to clear the salary dues of its employees.
Mallya said he’s optimistic about regaining the carrier’s lost air operating permit, according to three employees, who attended a meeting with representatives of the management on Thursday late evening. Bankers are, however, sceptical about the revival prospects of the airline.
Kingfisher Airlines has been grounded since October, following protests by employees against unpaid salaries and regulatory issues. Its flying licence expired on 31 December. Employees have not been paid since June.
In mid-February, lenders to Kingfisher Airlines had said they had decided to recall all loans to the airline, kicking off debt recovery process. The airline owes banks Rs.7,000 crore. Though Mallya has made several promises to revive the airline in the past, none of them has been fulfilled.
One of the employee representatives said Mallya “sounded genuine” and came with several documents to convince them about his intention to revive the airline.
“He said his priority is clearing off the salary dues,” this employee said, requesting anonymity.
Asked about the timeline, the employee representative said Mallya assured them that the salary dues would be paid shortly—either at the end of this month or early next month.
“We have waited for so long. Let us not sink the ship. We are giving him a last chance,” he said.
Another employee representative said Mallya assured them that he would discuss unpaid salaries with the airline’s chief financial officer.
The Kingfisher Airline spokesperson did not offer any comments on the Thursday meeting.
Bankers to Kingfisher Airlines ruled out any immediate possibility of the airline returning to the skies.
“We have already completed legal formalities for recalling the loans of Kingfisher Airlines. It should be over before March-end,” a banker said.
Mallya is likely to infuse Rs.750 crore into Kingfisher Airlines once the stake sale in United Spirits Ltd (USL) is complete.
Diageo Plc, the world’s largest liquor company, is to acquire 53.4% of United Spirits, a unit of the UB Group. It agreed to purchase a 27.4% stake in USL, including 19.3% from UB Group chairman Mallya, for £660 million and fresh equity from the firm; the remaining stake would be bought in an open offer to public shareholders.
“Mallya said he has secured all necessary approvals from regulators, including the Reserve Bank of India, to complete the United Spirits sale. He said once the funds start flowing into United Spirits, he will be able to revive Kingfisher Airlines,” the second employee said.
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First Published: Fri, Mar 22 2013. 11 50 AM IST
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