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Mumbai: Kingfisher Airlines Ltd’s striking employees rejected the airline’s offer to pay three months’ salary before Diwali to persuade them to return to work, sending the grounded airline’s stock down by 4.6% on Monday, extending its plunge.

As part of the offer to end the 23-day impasse, the Vijay Mallya-controlled airline on Monday had offered to pay employees salaries for three months dating back to March by 13 November and also promised regularization of salaries starting December and clearing all salary dues post a re-capitalization of the airline, according to two senior executives of the airline. Both the executives declined to comment about the source of funds to clear the salaries. Kingfisher Airlines employees have not been paid salaries since March.

Shares of Kingfisher Airlines fell 4.59% to end trading at 10.40 on BSE on Tuesday, while the exchange’s benchmark Sensex shed 0.44%.

The airline, which hasn’t reported a profit since its inception in 2005, has been grounded since 1 October following a labour unrest.

Sanjay Aggarwal, chief executive officer at Kingfisher Airlines, said on Monday that the management has offered a fair proposal to employees and the staffers are expected to come back with a decision in the next two days.

“The salary disbursement proposal should be acceptable for employees. We are expecting employees will resume work in two days. Once the employees resume work, we will be giving a comprehensive viable revival plan to the Directorate General of Civil Aviation (DGCA)," Aggarwal said.

He said it is difficult to put a timeframe as to when the airline will start operating flights. He, however, said that the airline would be extending its lockout to 25 October.

Eight representatives of employees met the management of Kingfisher Airlines and parent UB Group on Monday. “All is well," said Vikrant Patkar, a senior pilot with Kingfisher Airlines, without disclosing details. Patkar had participated in Monday’s meeting.

Text messages sent to Kingfisher employees had evoked a mixed response to the management’s proposal. While some of them approved the plan, others opposed it.

DGCA had asked the airline on 5 October to demonstrate why its permit to fly should not be suspended or cancelled for failing to establish a “safe, efficient and reliable service" and gave it 15 days to submit its reply. The carrier on Friday said it had replied to the showcause notice on why its licence should not be suspended. The regulator wasn’t satisfied with the replies.

The airline’s inability to come to an arrangement with employees is believed to be one reason why India’s aviation regulator had suspended its licence on Saturday.

The airline needs to submit a revival plan to DGCA before it can start services again. The carrier expects to resume flights on 6 November. Kingfisher had previously grounded flights until 23 October.

Meanwhile, K.R. Kamath, chairman and managing director of Punjab National Bank, a member of the 17-bank consortium of lenders to whom Kingfisher Airlines owes 7,500 crore (as on 31 March), said consortium leader State Bank of India will call a meeting this month to decide the course of action with respect to the ailing carrier. Kamath was speaking to reporters on Tuesday.

State Bank of India chairman Pratip Chaudhuri had earlier asked Kingfisher to raise at least 1,000 crore before the banks can lend it more money.

Kirthi.V. Rao of Mint contributed to this story.

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