New Delhi: After defaulting on payments to airports and oil companies, Kingfisher Airlines Ltd has delayed salary payments for the second consecutive month.
India’s second largest carrier by passengers suffered a loss of Rs 1,027 crore in the 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 7th day of every month. They are yet to be credited this month; last month, they were credited only by the 18th.
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“No one really knows or cares,” said a Kingfisher executive, asking not to be named. “What annoys (me) is not that salary is delayed, but (there is) no communication, because communicating that salary will be delayed will lead to people seeking answers as to who is responsible for the mess.”
This executive also alleged that the tax the company deducted from the salaries wasn’t being paid to the tax department. Mint couldn’t independently verify this claim.
A Kingfisher spokesperson declined comment.
A second Kingfisher executive, who also did not want to be identified, said employees were particularly worried about the delay in salary payments as they are in the midst of a festival season.
“Things are really bad. No one knows when the money will come,” this person said, referring to the money the airline has said it plans to raise.
Kingfisher wants to raise up to $350 million (Rs 1,722 crore) through the sale of global depository receipts and domestic offerings or a rights issue, which will also help lower its debt burden.
An analyst said the firm is under duress and the tax deduction issue appeared a way of funding the carrier on taxpayers money.
“Clearly, (Kingfisher) is funding itself at the expense of employees and the Indian exchequer, to which it owed tax deducted at source on behalf of its employees of $93 million as per the FY11 AR (2010-11 annual report),” Neeraj Monga of Toronto-based Veritas Investment Research said in a September report.
State-owned rival Air India, which too is under financial strain, has also delayed salary payments this year. Most employees have not been given their allowances—which form the bulk of the salaries at the company—for the past three months, leading to at least three dozen pilots quitting the airline.
Kingfisher’s stock rose 2.97% on BSE on Wednesday to end at Rs 20.80, compared with Rs 79.40 a year ago. The benchmark Sensex rose 2.55%.