Vendors threaten to pull AI, Kingfisher credit

Vendors threaten to pull AI, Kingfisher credit

New Delhi: State-run Air India Ltd and Vijay Mallya-controlled Kingfisher Airlines Ltd have been asked by fuel vendors and some airports to pay dues or risk losing their credit facility.

Air India will curtail some operations starting this month-end after oil companies told the airline they will only provide fuel against daily payments, and that the amount to be purchased needs to be intimated in advance.

GMR Infrastructure Ltd, which runs Delhi and Hyderabad airports, said in a late evening statement that it was withdrawing credit facilities for Air India and Kingfisher Airlines from 1 June if dues are not paid by then.

It’s the first time GMR has issued a public statement on defaults by airlines.

“These two airline companies will be allowed to operate their flights from and into Delhi and Hyderabad only on ‘cash and carry’ basis," GMR said, without specifying the total dues.

Air India owes 255 crore to GMR, while Kingfisher’s dues stand at 93 crore, according to a person familiar with the matter. Mint wasn’t able to confirm these amounts independently.

GMR asked the airlines to make payments “to avoid inconvenience that might be caused to their passengers".

A Kingfisher spokesman said the airline does not “discuss supplier and partner relationships" publicly.

Earlier this month, the Mumbai airport too had threatened to withdraw credit facilities from Kingfisher, after which the airline made payments, a Mumbai airport exectuive said.

Air India’s flights were disrupted on Friday after oil companies refused to provide it with fuel. Six flights from Thiruvananthapuram were cancelled.

Air India’s daily fuel purchase has gone up to Rs19 crore a day, after the 10-day pilot strike ended earlier this month.

Air India can only pay Rs16 crore a day, said an oil company executive, who declined to be named.

“We have been told to restrict their oil supply to the money they pay," this official said.

Air India’s total fuel dues to Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd amount to about Rs2,400 crore.

Friday’s disruptions led to meetings at the aviation ministry.

“The matter has been sorted out. They will manage within the fuel they pick up," said a ministry official, who declined to be named, after a late evening meeting between airline chairman Arvind Jadhav and ministry officials. This will lead to curtailed operations.

An Air India official, who declined to be named, said the airline was working on a schedule from 31 May that may include reduction in some international flights that “consume a lot of fuel" and clubbing some others.

These could include a reduction in services to Tokyo, London, Dubai and clubbing of flights between Abu Dhabi and Muscat, besides Paris and Frankfurt, among other changes.

“The reduction needs to be about 15-20% in terms of fuel consumption," the Air India official said, referring to the new schedule.

Another airline official said the government was not taking any action on the “bankrupt" carrier with most of the financial proposals, including “restructuring", being put on the backburner.

Money due from the Prime Minister’s Office and the ministries of defence and external affairs for use of Air India planes adds up to Rs450 crore, this official said. “Please give us the money and we will pay. We are bankrupt," he said.