New Delhi: Tycoon Vijay Mallya’s Kingfisher Airlines Ltdhas sought a second extension of 10 days to pay state-run Indian Oil Corp. Ltd (IOC) after missing a 10 April date to settle the tab for jet fuel supplied by the refiner. The airline had sought the first extension after skipping a 31 March deadline to pay the firm.
The airline owes around Rs1,000 crore to oil marketing companies such as IOC, Hindustan Petroleum Corp. Ltdand
Cash and carry : A Kingfisher plane seen through Terminal 1D at the Indira Gandhi International Airport in Delhi. Firms such as Bharat Petroleum and IndianOil have stopped selling jet fuel to the airline on credit. Ramesh Pathania / Mint
Bharat Petroleum Corp. Ltd (BPCL). Dues to IOC amount to around Rs90 crore.
“As of now, Kingfisherhas asked for another 10 days extension beyond 10 April. The company (IOC) has the option to encash the bank guarantee of around Rs65 crore given by the airline. They have also given some post-dated cheques. They are also yet to clear their dues with the other oil firms,” said a person familiar with the development, who did not want to be named.
Airlines such as National Aviation Co. of India Ltd-run Air India and Jet Airways India Ltd, too, had missed some payments due to oil firms, but owe much less.
A Kingfisher Airlines spokesman said the airline does not wish to comment on its relationship with suppliers.
India’s airlines are struggling with declining passenger traffic in the face of an economic downturn, overcapacity and intense competition. They are estimated to have posted a combined loss of $2 billion (Rs9,980 crore now) in the year ended 31 March.
In October, the Union government allowed the country’s three largest carriers—Air India, Jet Airways and Kingfisher Airlines—to pay dues amounting to Rs2,962 crore over a period of six months to oil marketing firms.
“When you are in a difficult environment, it is natural to have delays and overruns (in making payments),” aviation consultancy Centre For Asia Pacific Aviation’s India office chief executive Kapil Kaulsaid. “I am sure that Kingfisher will be able to raise the first set of capital by next few weeks.”
Kingfisher Airlines, which has said it plans to raise $400 million, is now in talks with banks such as State Bank of India to raise up to Rs3,000 crore in loans, according to previous reports.
“They (Kingfisher) have given some post-dated cheques and have made some payments. These are commercial details which we should not discuss,” said G.C. Daga, director of marketing at IOC, the country’s largest oil marketing and refining company.
As a consequence of missing the deadline for oil dues, BPCL has stopped selling jet fuel to Kingfisher Airlines on credit and instead moved to a so-called cash-and-carry arrangement, joining IOC in adopting a no-credit stance with the carrier.
Kingfisher Airline’s shares rose Rs1.80, or 4.68%, to Rs40.30 at close of trading on the Bombay Stock Exchange on Wednesday.