There seems to be no end to turbulent times for debt-laden Kingfisher Airlines. The service tax department has frozen some more of its bank accounts after it missed the deadline for clearing its dues.
"Over Thursday and Friday, we froze 40 bank accounts of Kingfisher Airlines. They failed to meet the February 29 deadline to make the payments. The airline owes Rs 40 crore to the department," said Service Tax Commissioner SK Solanki on Saturday.
Last week, the Central Board of Excise and Customs (CBEC) had frozen some of its bank accounts for nonpayment of dues and had given it time till February 29 (Wednesday) to pay Rs 10 crore as arrears.
Asked if the airline had communicated with the department, he said, "Not yet as today being a Saturday. We hope to hear from them on Monday."
Since the account was frozen first time in early November last, the airline had paid only a little over Rs 30 crore, Solanki added.
Meanwhile, Corporate Affairs Minister M Veerappa Moily has said that the cash-strapped carrier was "not professionally managed" and the onus was on promoter Vijay Mallya to convince the lenders.
Chairman of the Central Board of Excise and Customs, under which the service tax department falls, SK Goel had on February 22 said the airline had to clear this indirect tax dues of Rs 70 crore before March 31. "Kingfisher has an outstanding service tax dues of Rs 70 crore and the company had promised to pay in instalments," Goel had said in New Delhi.
The beleaguered airline has been in a financial mess and is unable to meet its obligations, including paying salaries to its employees, for months on end now.
Following continuous non-payment of salaries, late last week a section of its engineers went on a 'tools-down' protest for a day. This came even as airline chairman Vijay Mallya in an internal communication towards the middle of last week had promised to clear all the salary arrears at the earliest saying he had made arrangements for that.
As crisis deepened and salaries did not come by, its employees left the crippled organisation en-masse, especially the most critical pilots. Over 60 pilots have left so far in the past few months alone.
As pilots left and the cash flow turned dry, the airline massively reduced its flights beginning mid-October. From 400 flights a day, it is operating only 170 flights now, using just 28 of its 64 fleet.
Kingfisher, suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057 crore. It posted a Rs 444.26 crore loss in the third quarter of this fiscal due to high fuel costs and weaker rupee, up from Rs 253.69 crore a year ago. The government has said repeatedly that it will not bailout Kingfisher Airlines.
Following orders of the aviation regulator DGCA, Kingfisher Airlines submitted a revised schedule of its flights on February 22 based on its current flying capacity. It has scaled down its operations to about 170 flights daily. When the winter schedule for the airline came into operation last October, it had sought permission for 400 daily flights. Only 28 of Kingfisher's 64 planes are currently in use.
Kingfisher Airlines is reportedly in talks with two foreign carriers including International Airlines Group (IAG), the owner of British Airways and Iberia, for a potential rescue package.
The State Bank of India (SBI), the lead lender to Kingfisher Airlines, has said it would not consider any fresh loans for the debt-laden carrier until it raises new equity itself.
The airline urgently needs at least Rs 2,000 crore working capital to remain afloat.
(With inputs from PTI )
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