New Delhi / Mumbai: India’s three biggest airlines, which collectively owe almost Rs3,000 crore to oil firms, have started repaying the dues they have run up on purchases of jet fuel.
The country’s biggest airline by passengers carried, Jet Airways (India) Ltd, has paid Indian Oil Corp. Ltd, or IOC, Rs145 crore—the first payment of a six-instalment plan.
Jet’s closest rivals, Kingfisher Airlines Ltd and state-owned National Aviation Co. of India Ltd, or Nacil, also paid part of their dues to IOC, an executive at India’s largest oil firm said, declining to be named because he is not authorized to speak with the media.
“Nacil and Kingfisher have made the payment of Rs73 crore and Rs11 crore, respectively, as against the first instalment amount of Rs80 crore and Rs18 crore, respectively. Kingfisher Airlines is saying that the Rs7 crore amount has to be adjusted against previous bills, the details of which can only be ascertained tomorrow (Tuesday),” the IOC executive said. Nacil runs the Air India airline service.
Details of the airline firms’ payments due to other state-run oil firms such as Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd were not immediately available.
In all, Nacil, Jet Airways and Kingfisher owe Rs2,926 crore—split into Rs886 crore, Rs1,057 crore and Rs983 crore, respectively—to the three oil firms. Of this, payment of Rs2,131 crore is overdue beyond the credit period airlines have with the oil firms, which expect losses of Rs1.22 trillion this fiscal. It is not known how much each airline owes each oil firm.
Low-cost airline firms such as SpiceJet Ltd and Interglobe Aviation Pvt. Ltd, which runs IndiGo, do not have any significant overdues pending with oil firms nor have they exceeded their credit limits.
Airlines in India say they will make losses of about $2 billion, or Rs9,80 crore, this fiscal year, mostly on account of high aviation fuel prices. At a meeting of the oil and aviation ministries, led by respective ministers Murli Deora and Praful Patel, the government decided that the airlines could pay their overdues in six equal instalments (one every 26 days) running to March.
The government had provided the airlines with this cushion on assurances that they will not retrench staff as a measure to cut costs.
Jet Airways on Monday declined to reveal details. “This is an agreement between Jet Airways and the government. The company has taken necessary actions in accordance with the agreement (with the government),” Jet Airways executive director Saroj K. Datta said.
Separately, Monday was also the deadline set by Airports Authority of India, or AAI, for Kingfisher’s payment of airport charges owed, estimated at Rs280 crore. The airline’s chairman Vijay Mallya said he would meet AAI chairman K. Ramalingam late in the evening to sort out the issue.
“We will make the payment today (Monday),” Mallya told reporters when asked about his meeting.
He did not disclose details of the payment.
Other private airline do not have significant outstanding dues with the airports regulator, a senior AAI official told Mint last month.
After the expiry of an initial 31 October deadline for the payment, AAI had given Kingfisher several extensions, the last of which expired on Monday. If Kingfisher failed to meet even this extension, said a senior aviation ministry official, the airline may likely have to work on a “cash and carry” basis with the regulator. The official declined to be named.
The ministry had told AAI to encash Kingfisher’s bank guarantees in case the payments are not made on Monday, the same official said.
At the time of going to press, Mint could not ascertain the outcome of Mallya’s meeting with Ramalingam of AAI.