Settling dues

Mumbai, Nov. 4: Bharat Petroleum Corporation Ltd today reached an out-of-court settlement with Vijay Mallya’s Kingfisher over the non-payment of dues by the airline.

Sources said BPCL would get a payment of Rs 40 crore within 12 days from Kingfisher Airlines. The airline owes BPCL Rs 314 crore for jet fuel supplied by the state-run company.

The remaining Rs 274 crore will be paid within a year in monthly instalments of not less than Rs 10 crore per month. BPCL and Kingfisher Airlines have declined to comment on the development.

Kingfisher’s dues began accumulating since February, following which BPCL took the matter to Bombay High Court. A month ago, Kingfisher had offered to repay the dues in monthly instalments of Rs 10 crore. However, the offer was rejected by the BPCL counsel as being “too low”. Wednesday’s settlement indicates a victory for BPCL as it managed to secure an upfront payment as well as monthly instalments of at least Rs 10 crore.

On Wednesday, there were reports that Kingfisher might consider terminating the services of around 100 trainee co-pilots by not renewing their service contracts. Reports said the co-pilots feared they would no longer be paid their stipend and might be sent on leave without pay. This could further snowball into a termination of their service contracts.

A Kingfisher Airlines spokesperson, however, denied such a move. “We categorically deny that Kingfisher Airlines has given pink slips to any trainee co-pilots.”

Kingfisher has a debt of Rs 6,000 crore on its books. It suffered a loss of Rs 418 crore for the quarter ended September 30, 2009 against a loss of Rs 483 crore in the year-ago period.

The airline is also involved in a legal tussle with Lufthansa Technik for alleged non-payment of dues for aircraft maintenance.

Kingfisher has recently undertaken some route rationalisation measures. It is also keeping a lid on costs, the airline’s management said.

The airline’s scrip closed at Rs 46.45 on the BSE today, an increase of over 10 per cent over Tuesday’s close of Rs 42.15.