The Telegraph
Wednesday , November 14 , 2012
Since 1st March, 1999
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Kingfisher fails to keep pay promise

New Delhi, Nov. 13: Kingfisher Airlines has failed to pay salaries for May to more than 3,000 employees even after making a commitment to clear the arrears before Diwali.

“Even after promising to pay salaries by Diwali the company did not do so. As always we have been left in a lurch. We did not receive salaries in our account till late last night, although the management had made tall claims of clearing our dues by the festival,” an airline source said.

The Vijay Mallya-promoted airline, grounded since October 1 after its engineers and pilots went on a strike demanding salaries, has not paid its employees since May.

The employees called off their strike late last month after CEO Sanjay Aggarwal requested them to return to work with the assurance that they would receive their salaries for March to May in a staggered manner by Diwali.

Debt-ridden Kingfisher Airlines widened its losses during the quarter ended September because of a steep decline in revenues. The company said it was preparing a comprehensive plan to restart operations soon.

The airline suffered a record net loss of Rs 754 crore during the quarter against a loss of Rs 469 crore a year earlier. The net loss includes a one-time cost of Rs 448 crore.

Revenues dipped 87 per cent to Rs 200 crore from Rs 1,550 crore a year ago as the airline operated a limited schedule with just 20 planes against 65 a year ago.

The Directorate General of Civil Aviation (DGCA) had suspended the airline’s licence last month after it failed to address the regulator’s concerns about safety.

Lenders have been putting pressure on Mallya to bring in capital to revive the carrier. It needs to raise or commit at least $1 billion by November 30 as the lenders are not looking at liquidating the airline’s assets right now.

The SBI, the largest lender to Kingfisher, wants the airline’s promoters to bring in a minimum of Rs 5,400 crore by the end of this month.

Diageo has recently agreed to buy a majority stake in Mallya-controlled United Spirits Ltd for Rs 11,000 crore. However, Mallya adopted a guarded approach on the issue of using the proceeds of the deal to bail out Kingfisher.

“Each individual company is a public entity. Kingfisher Airlines’ issues will be resolved by Kingfisher Airlines and UB Holdings. It will be unfortunate if you try to link this transaction with the airline. Let’s not cross-contaminate everything and interrelate everything,” Mallya said.