Kingfisher Airlines extends lockout until 5 November

The government may take a call on suspending the carrier’s flying licence on Friday or Saturday
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First Published: Thu, Oct 18 2012. 10 18 PM IST
Kingfisher Airlines, launched in May 2005, has never made a profit. Photo: Kalpak Pathak/Hindustan Times
Kingfisher Airlines, launched in May 2005, has never made a profit. Photo: Kalpak Pathak/Hindustan Times
Updated: Fri, Oct 19 2012. 12 05 AM IST
New Delhi: Kingfisher Airlines Ltd has again extended its lockout till 5 November, stretching the shutdown that began on 1 October because of an employee protest and was to end this Saturday. The cash-strapped carrier has closed ticket sales till 5 November, a government official and a Kingfisher executive said.
The official said the government may take a call on suspending Kingfisher’s flying licence on Friday or Saturday. The government issued a notice to the airline earlier this month asking it to defend itself and explain why its licence should not be cancelled.
“All ticket sales have been stopped till 5 November,” said the Kingfisher executive. What worries the airline’s 3,000 employees, he said, was not so much whether the carrier can resume operations but how they would be paid their salaries, pending since March.
Both the government official and the Kingfisher executive declined to be identified.
With most other options exhausted, the government should handle Kingfisher the same way it did Satyam Computer Services Ltd, the government official said.
After Satyam’s founder B. Ramalinga Raju admitted to a multi-crore accounting fraud at what once was India’s fourth largest software firm, the government nominated a board to help revive it. Eventually, Tech Mahindra Ltd bought Satyam in an auction.
“A Satyam model can be used for Kingfisher if the government decides on it,” the official said. “In that brand is retained but fresh management can take over while (the airline’s) Rs.8,000 crore debt is kept aside for sometime. Ultimately, it’s a national asset; where will the thousands of skilled employees go?”
Talks on Wednesday between Kingfisher’s management and its employees failed as the employees declined the airline’s offer to pay March salaries now and make some more payments next month, around Diwali. There was no clarity on the remaining salary dues, the airline executive said.
Talks are rescheduled again for Monday.
“I am very sure the regulator will give Kingfisher another extension to reply to the show-cause (notice),” the executive said. “They will say talks are on with the employees and, therefore, it will be wrong to cancel or suspend the licence.”
Kingfisher promoter Vijay Mallya, who has been out of the country for many weeks now, is expected to be in town around 25 October as he also is the owner and team principal of the Force India Formula 1 team.
The Indian Grand Prix is scheduled to take place at the Buddh International Circuit in Greater Noida from 26-28 October, where Mallya’s team is scheduled to participate.
The world’s biggest spirits company, the UK’s Diageo Plc., is in talks to buy a stake of about 20% in Mallya’s flagship company United Spirits Ltd. It is unclear if his UB Group will use money from the stake sale to fund Kingfisher Airlines. Lenders have asked the promoter to put in more money into the airline before they can release additional funds for it.
Kingfisher Airlines, launched in May 2005, has never made a profit, and has a debt pile of over Rs.8,000 crore, including over Rs.420 crore of tax arrears.
Kingfisher’s shares on Thursday fell by about 5% after the company’s meeting with employees on Wednesday.
Shares of the company opened weak and soon fell by 4.76% to Rs.12, touching the lower circuit limit on BSE.
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First Published: Thu, Oct 18 2012. 10 18 PM IST
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