Mumbai: The debt-laden Kingfisher Airlines on Saturday averted a major showdown with the Mumbai International Airport (Mial), which had threatened to ban its operations over a payment default, by clearing the dues towards airport charges.
“We have received a cheque payment for Rs105.71 crore and with that the issues regarding payment default has been resolved. The airline can operate normally from our airport,” Mumbai International Airport president Rajiv Jain told the news agency.
Also Read | Mial asks Kingfisher to pay Rs105.71 crore dues
The Mial had earlier this month threatened to prevent Kingfisher Airlines from operating out of its premises from Saturday if the liquor baron Vijay Mallya-promoted carrier did not clear the dues worth Rs105.71 crore towards airport fees or opt for a cash-n-carry mode of payment.
Phone calls and text messages to Kingfisher did not elicit any response.
Early this week, a senior Mial official had told this agency that the response that Kingfisher had given to the airport was not satisfactory and that unless the airline cleared the dues by 14 May, they would not be allowed to operate.
“Their response is satisfactory. Therefore, we have decided to put them on a cash-n-carry mode from 14 May and if they don’t agree, then they will be banned from operating from our airport,” a senior Mial official had told the news agency last Wednesday.
In a letter dated 7 May, Mial had warned Kingfisher of withdrawing credit facility it has been enjoying from December 2010 from 14 May and had sought payments latest by 25 May. Kingfisher had in December promised to clear the dues by February. But its cheque to Mial, which is promoted by the Hyderabad-based GVK Group, bounced recently.
As per the airport, as on 30 April, the airline owed Rs105.71 crore to it by way of charges for airport services, which include the landing and parking charges.
Kingfisher has also not paid the passenger service and airport development fees it collects from passengers to the Mumbai airport, an airport official had said.
Kingfisher, which had restructured Rs750 crore of its debt last November, is still sitting on a debt pile of Rs6,900 crore.
Even after six years into operations, Kingfisher is yet to turn profitable. Industry analysts say the airline will record losses in the fourth quarter too, as oil price has been on the boil for quite some time now. Fuel cost alone constitutes over 40% of operational cost of an airline.
This is the second time that Kingfisher payments have bounced. In June 2009, the airline could not honour a cheque worth Rs23 crore to the Airports Authority of India.
The aviation sector was one of the worst hit by the recent global financial crisis, and as the crisis lingered longer than expected, domestic operators flew into red and Kingfisher, along with national carrier Air India, was one of the worst hit.
As the loans to the airlines turned negative, banks moved the Reserve Bank for a debt recast, and last September the Central bank had agreed for the same, following which Kingfisher was the first to gets its debt restructured in November.
Following this, on 6 April, a consortium of 13 banks, led by the State Bank and ICICI Bank, converted Kingfisher’s Rs750 crore debt into 23.37% equity, valuing the airline’s shares at Rs64.48 a piece, which is a 61.6% premium over the closing price on the conversion day at Rs48.05, which works out to only Rs557.38 crore.
The price was the average of the past six months, as per Sebi guidelines and was arrived at on 1 March. With this conversion of equity shares, the promoters holding in the airline has declined to 58.6% from 66.2%.
Even after the recast, the cash-strapped airline is sitting on a debt pile of Rs6,900 crore and has been trying to raise around $300 million from a global depositary receipts issue, but not with success so far. A part of the reason for this could be the still rising oil prices.