New Delhi: Kingfisher Airlines Ltd has told employees that a looming capital crunch coupled with a gloomy economic environment is making it difficult for the carrier to pay salaries on time.
The Vijay Mallya-led airline has been under financial stress for the past two years and has delayed salaries to employees for the second consecutive month. Salaries are typically disbursed on the seventh day of a month, but employees had received neither salaries nor a message explaining the delay, Mint reported on Thursday.
“You are aware that Kingfisher has been trying to raise capital for some time now. Due to uncertain economic global climate, we have not been successful yet,” chief executive Sanjay Aggarwal wrote in an email to employees on Saturday. “Higher oil prices, lean season, low yields and devaluation of rupee have all compounded the issue...causing occasional disruptions in the operations and delay in salaries.”
Kingfisher has been trying to raise up to $250-350 million (Rs 1,222-1,7111 crore) through the issue of global depository receipts and domestic offerings or a rights issue, but has not been able to do so yet. Its lost Rs 1,027 crore in the fiscal year ended 31 March, by when it had accumulated Rs 7,057.08 crore in debt.
Aggarwal said 75% of employees have been paid for September and the rest can expect salaries by 17 October, adding that the airline would try to prevent a repeat. “I want you to know that we are taking all possible steps to deal with this exceptional situation,” he said in the email reassuring employees.
On 15 October, state-run oil refiner Hindustan Petroleum Corp. Ltd (HPCL) temporarily suspended supply of fuel to Kingfisher for the second time in four months, citing non-payment of dues. Several of the airline’s flights, with passengers aboard, were stranded at various airports for several hours before fuel supply was restored after a deal was struck between HPCL and Kingfisher.
On Monday, Kingfisher Airlines shares rose 0.69% to Rs 21.80 apiece, down 71% from Rs 75.20 a year ago, on the Bombay Stock Exchange. The benchmark Sensex fell 0.34% on Monday.