New Delhi: Mumbai International Airport Ltd (Mial) has asked Kingfisher Airlines Ltd to pay up dues running up to Rs 105.71 crore immediately, after the carrier’s cheques to the airport operator bounced.
Mial has said it would withdraw its credit facility to Kingfisher effective 14 May, which would require the airline to pay for the airport’s services on a cash-and-carry basis, said a person familiar with the development, asking not to be identified.
The GVK Power and Infrastructure Ltd-led Mial wrote to Kingfisher’s chief executive Sanjay Aggarwal on 7 May, reminding him that the airline had not kept its December commitment to pay the airport charges by February.
“Based on your assurance, Mial did not take any action on cheques bounced and waited for payment,” Mial said in the letter, which Mint has reviewed. “We regret to inform you that as on 30th April, the total outstanding of Kingfisher is Rs 105.71 crore.”
Airport charges include the landing and parking fees airlines pay to the airport. Kingfisher has also not paid Mial passenger service and airport development fees it collects from passengers.
“It is a serious violation by Kingfisher and it has been pointed out to Kingfisher in the past also,” Mial president R.K. Jain said in the communication, seeking the payment between 10 and 25 May.
A spokesman for Kingfisher said the airline will not “comment on or discuss supplier and partner relationships”.
This is not the first time a cheque from Kingfisher has bounced. In June 2009, a Rs 23 crore cheque it submitted to Airports Authority of India had bounced.
Kingfisher owes about Rs 70 crore to the operators of the Delhi and Hyderabad airports as well. An executive at GMR Infrastructure Ltd, which leads the consortia that run the two airports, said the airline has promised to clear its dues in a few months and has issued post-dated cheques. The executive declined to be identified.
Kingfisher, with a debt of at least Rs 6,000 crore, has been hoping to raise $250-300 million (Rs 1,117-1,341 crore) through an issue of global depositary receipts on the Euro MTF Market of the Luxembourg Stock Exchange, but has not been able to as its stock price has slumped.
On 6 April, a consortium of 13 banks converted Kingfisher’s Rs 750 crore debt into 23.37% equity in the airline, valuing the company’s shares at a 61.6% premium over the price prevailing that day. Consequently, promoter holding in the Vijay Mallya-run airline declined from 66% to 58%, Mint reported on 14 April.
Kingfisher’s stock ended at Rs 43.00, up 0.12%, on Tuesday on the Bombay Stock Exchange, while the Sensex was down 0.09%.
Kingfisher requires cash urgently “to pay your outstanding in the market and raise revenues over your costs to be able to survive”, said Kapil Kaul, chief executive, South Asia, at the Centre for Asia Pacific Aviation.
The industry body expects Kingfisher to post a loss for fiscal 2010-11 as well. The six-year-old carrier is yet to make a profit.
“What is worst is that like everyone else, their cost has been hit because of high fuel prices and Air India’s low pricing has hit their revenues,” said Kaul.