DGCA issues show-case notice to Kingfisher

Airline given 15 days to reply to notice asking why its operating permit shouldn’t be suspended
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First Published: Fri, Oct 05 2012. 04 16 PM IST
Kingfisher said on Thursday night that said it would extend the lockout to 12 October, or whenever employees return to work. Photo: Ramesh Pathania/Mint
Kingfisher said on Thursday night that said it would extend the lockout to 12 October, or whenever employees return to work. Photo: Ramesh Pathania/Mint
Updated: Fri, Oct 05 2012. 11 21 PM IST
Mumbai: India’s aviation regulator on Friday asked Kingfisher Airlines Ltd to explain why its operating permit shouldn’t be suspended as the cash-strapped carrier struggles to resume flights after declaring a partial lockout because of employee protests.
The Directorate General of Civil Aviation (DGCA) asked the airline to reply within 15 days, said a DGCA official on condition of anonymity.
In an earlier interview, civil aviation minister Ajit Singh said the regulator would send a show-cause notice to the airline and may suspend its operating permit. He said DGCA had sought legal opinion on whether it could suspend the permit when the airline is under lockout and had been informed by legal experts that the lockout would have no bearing on such a decision.
Debt-laden Kingfisher Airlines, controlled by liquor baron Vijay Mallya, said late on Thursday that it would extend the partial lockout to 12 October, or whenever employees return to work. The lockout was supposed to have ended on Thursday.
“We have received a show-cause notice from the DGCA, which we have to reply to within 15 days. We will send a detailed response to the DGCA well in time. We will also submit a comprehensive plan for restoration of services after negotiations with our employees,” said Prakash Mirpuri, vice-president (corporate communications) at Kingfisher Airlines.
The aviation minister said the airline had not given satisfactory responses to queries related to aircraft maintenance, the integrity of flight schedules and payment of salaries dues to its employees. Kingfisher has not paid its staff since March.
“Now, DGCA will issue a show-cause notice to Kingfisher Airlines asking why it should not suspend its licence,” Singh said in an interview earlier. Mint could not immediately contact DGCA.
Kingfisher Airlines has Rs.5,695 crore of debt and accumulated losses of Rs.7,262 crore. Consultancy firm Centre for Asia Pacific Aviation said on Thursday that Kingfisher should voluntarily shut down in order to reorganize and restructure its operations.
Employee protests have added to the pressure on the airline where many employees walked off the job on Sunday, leading to the lockout.
“We regret that the illegal strike has still not been withdrawn and normalcy has not been restored in the company, thereby continuing to cripple and paralyse the working of the entire airline,” Mirpuri said.
Meanwhile, Kingfisher Airlines will get about Rs.60 crore from lenders to help it make payments to employees, according to two bankers who didn’t want to be named.
The move follows newspaper reports that the wife of a Kingfisher employee had committed suicide because of financial distress. “This is a temporary working capital lifeline extended to the airline following the suicide of a Kingfisher Airlines employee’s wife. Half of the money would be used to disburse salaries,” said an airline executive, requesting anonymity.
The money will come from the consortium of 17 bankers, led by State Bank of India, to the carrier, said one of the two bankers.
Kingfisher Airlines shares fell 4.68% to Rs.13.25 on BSE on Friday; the benchmark Sensex lost 0.63% to 18,938.46 points.
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First Published: Fri, Oct 05 2012. 04 16 PM IST
More Topics: Kingfisher | debt | aviation | banks |
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