Mumbai/New Delhi: State-run oil refiner Hindustan Petroleum Corp. Ltd (HPCL) temporarily suspended supply of fuel to Kingfisher Airlines Ltd on Thursday for the second time in four months.
The suspension of supply by the airline’s largest vendor, citing Rs 130 crore in dues, grounded many of its flights during peak hours, resulting in a loss of revenue and adding to the financial stress of India’s second largest airline by passengers carried.
“HPCL has demanded at least Rs 100 crore immediate payment to clear the dues,” said a person aware of the development. He did not want to be identified, considering the sensitivity of the issue.
Kingfisher said in a late night statement that there was a “temporary disruption of supplies leading to a delay on some flights” due to “a minor issue with one of our ATF (aviation turbine fuel) suppliers”. The airline said regular fuel supply had been restored and that flights would continue normally.
Earlier, a senior HPCL executive confirmed that his company had suspended fuel supply to Kingfisher Airlines “temporarily” and “it will be sorted out in the next few hours as the airline is willing to clear some dues”. The official did not want to be identified. Calls to an HPCL spokesperson did not get any response.
“The fuel supply is expected to resume by midnight. But these delays are an indication of the depth of the financial troubles that Kingfisher Airlines is facing. The airline will lose its credibility if the schedule is disrupted frequently,” said an airline consultant, requesting anonymity.
In mid-July, HPCL had briefly stopped jet fuel supply to Kingfisher Airlines, but resumed it after the airline paid for aviation turbine fuel.
HPCL had put Kingfisher Airlines on cash-and-carry mode as the carrier’s outstanding exceeded the bank guarantee it had furnished against default. Indian Oil Corp. Ltd and Bharat Petroleum Corp. Ltd have been supplying fuel to the airline only on cash before flights for several months.
At the Delhi airport, six Kingfisher flights were delayed after 5.30pm, according to an airport official, who declined to be named. “Passengers are sitting inside the terminal. New check-ins have been stopped by the airline,” he said.
Atul Wakankar, an information technology professional, was among at least 200 people stranded at the Mumbai airport on Thursday evening. His Kingfisher flight to Bangalore IT-111 at 6.20pm didn’t take off.
“All the Kingfisher flights are stranded. There are no flights taking off. Nobody is there to tell you the exact situation. First (they were told by the airline) it was weather problem; then it was operational problem; I think it will become another problem in some time,” Wakankar said, describing the chaos at the country’s second busiest airport. “I will wait for some more time and then go back home.”
On Wednesday, Sahara Group chairman Subrata Roy acquired a 42.5% stake in Force India, the Formula One team owned by liquor baron Vijay Mallya, for $100 million (Rs 490 crore). The deal is expected to help Mallya infuse funds into the racing team and leave money to revive other struggling group companies, including Kingfisher Airlines, as the needs of the Formula One team have been met.
On Thursday, Mint reported that the airline has delayed salary payments for the second consecutive month.
The carrier suffered a loss of Rs 1,027 crore in the fiscal year ended 31 March, by when it had accumulated Rs 7,057.08 crore in debt.
Salaries are typically credited to the accounts of its employees on the seventh day of every month. They are yet to be credited this month; last month, they were credited only by the 18th.
Kingfisher Airlines shares rose 11.8% to Rs 23.25 apiece on Thursday on the Bombay Stock Exchange, while the benchmark Sensex dropped 0.44%. The suspension of fuel supply happened after market hours.