Kingfisher to operate only 20 aircraft, no overseas flights: Mallya

Kingfisher Airlines has said it will halt international flights and fly just 20 planes as it seeks funding, hours after the government warned the carrier's license may be canceled if it fails to meet safety norms and financial viability conditions.

The embattled airline, which has debts of $1.3 billion, is scrambling to raise funds after banks refused to lend more for its day-to-day operations.

A big cutback in flights has reduced its revenue, leaving the carrier controlled by flamboyant liquor baron Vijay Mallya with little cash to pay staff, airports, tax authorities and lenders.

"If he gives a plan and says I have that many planes, that much schedule, then why should we cancel?," Aviation Minister Ajit Singh said ahead of Mallya's meeting with the regulator to submit a recovery plan for the carrier.

"The problem is, (in the) last two to three months, he has given several plans and he has not adhered to any of them," Singh said, warning that the airline was liable for prosecution over unpaid taxes.

"If passenger safety is compromised we'll not let any airline fly. Safety norms also involves financial viability," Singh said.

Kingfisher said it had submitted an interim plan to operate 20 planes on between 110 and 125 domestic routes a day, and halt international flights by April 10. The carrier's fleet, which earlier had 64 planes, now has 47.

"We have not submitted an ambitious plan. We have submitted a holding plan," Mallya told reporters.

The company has said it is in talks with potential investors, some of which would require India to allow foreign carriers to own up to 49 percent of Indian airlines, a change the government is considering.

"Some of the potential investments depend on the change in FDI (foreign direct investment) policy but there are other investors we are in discussions with," Kingfisher Chief Executive Sanjay Aggarwal told reporters.

Cancellations have already disrupted the travel plans of thousand of passengers across the country and pushed up fares.

UNFRIENDLY SKIES

Shares of Kingfisher Airlines, which has a market capitalisation of about $200 million, hit an all-time low in early trade on Tuesday before closing 5.5 per cent lower.

Kingfisher has never made a profit in a struggling Indian airline industry that is saddled with high fuel costs, stiff competition and low fares.

Five of India's six airlines are in the red and domestic carriers are likely to lose a total of $2.5 billion in the year through March, according to the Centre for Asia-Pacific Aviation (CAPA), an industry consultancy.

"As a government, we don't want to shut down any industry. There are employees and customers involved. Kingfisher had 22 percent traffic. If we close it suddenly, where will the fares go?," Singh said.

Global industry body IATA has suspended Kingfisher from its settlement system, restricting bookings through overseas agents, hitting ticket sales. On Monday, the last of Kingfisher's independent directors resigned.

The carried needs at least $500 million immediately to keep flying and $800 million to return to full operations, according to CAPA.

Kingfisher's billionaire chairman owns one of the world's most expensive yachts as well as cricket and Formula One teams, but he has been unable to raise fresh equity for an airline that was once India's second biggest by passengers.

"Mallya has been talking a lot about capital but I think he's only doing it to calm the situation and postpone the problems. We have not seen any money," said a senior executive at a state-run bank, which recently downgraded Kingfisher's loan to non-performing status.

There are no provisions for companies to declare themselves legally bankrupt in India.

"Right now, it is a complicated situation. We are closely monitoring," said the banker, who requested anonymity as he was not allowed to talk about clients.

Copyright @ Thomson Reuters 2012

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Kingfisher to suspend all international flights, says Vijay Mallya

New Delhi:  Kingfisher Airlines, owned by liquor baron Vijay Mallya, has decided to end its international flights. The airline, which has a debt of 7000 crores, has committed today to running 125 domestic flights everyday using 20 aircraft. Its fleet number was 64 till a few months ago. Mr Mallya has promised, that unlike in the last few months, these flights will not be cancelled at the last minute because of the airline's expansive financial problems.
Mr Mallya had been summoned to meet the Directorate General of Civil Aviation (DGCA) today to explain recovery plans. Earlier, Civil Aviation Minister Ajit Singh warned that Kingfisher could lose its license if it was not able to furnish a believable turnaround strategy, or if the DGCA found safety being compromised. DGCA chief Bharat Bhushan told NDTV today that a special team conducts safety checks on Kingfisher flights every day to ensure passengers are not at risk.
"The problem is, last two-three months, he has given several plans and he has not adhered to any of them," Mr Singh said. "If passenger safety is compromised, we'll not let any airline fly. Safety norms also involve financial viability," he added. After the meeting with Mr Mallya, the DGCA chief said he had no plans for now to revoke Kingfisher's license.
Mr Mallya said that operating international flights does not make sense given that it has been suspended by IATA which helps airlines by serving as the middlemen between them and various service providers like caterers and ground handlers for passengers and baggage at different airports. Without IATA, Kingfisher would have to handle these payments directly in different currencies - a logistical nightmare. Mr Mallya said that he is not setting an ambitious target for the summer, and said he is hopeful of foreign investment. The government is considering a proposal to allow foreign airlines to own upto 49% of Indian carriers.
Kingfisher employees including pilots have not been paid for several months. Recently, the airline has blamed this on the income tax department which has frozen several of its accounts. Today, Mr Mallya said he hopes to clear all outstanding bills soon for employees.

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Kingfisher to have full recovery plan in 2-3 days: Vijay Mallya

Cash-strapped Kingfisher Airlines will have a full recovery plan in place in 2-3 days, chairman Vijay Mallya said on Thursday.

One foreign airline and two non-airline foreign investors are interested in buying stake in the carrier, Mallya told reporters after a meeting with the debt-laden airline's pilots, who have been protesting against delayed salaries.

Mallya today met with striking pilots to end a row over unpaid wages that has led to cancellation of scores of flights.

Mallya did not disclose details of the meeting, but said it was a "productive" one.

"The pilots are extremely supportive to the company," Mallya said while addressing the media after his meeting.

Mallya said his top priority now would be to pay the pilots their salary. He also assured the press that KFA's flights would be on time.

The pilots' strike has forced the cash-strapped carrier to cancel more flights on top of those it scrapped last month to reduce expenses.

Kingfisher, which earlier this week announced it was curtailing its overseas flights in order to lower costs, had initially announced it was cutting its daily flight schedule to 175 from around 250.

The pilots' strike has further reduced the number of flights to around 100 a day.

At least 60 pilots have already left the airline to fly with rivals according to PTI.

The carrier has never turned a profit since its launch in 2005 and owes millions of dollars to suppliers, lenders and staff.

Its bank accounts have been frozen by authorities due to the non-payment of taxes and it has been dropped from a vital global payments and booking system run by the International Air Transport Association (IATA).

The airline's net loss widened sharply to Rs 4.44 billion ($88 million) in the three months to December from a loss of Rs 2.54 billion a year earlier, while its debt totals at least $1.3 billion.

India's airline industry - once a symbol of the country's economic progress - is now plagued by high fuel prices, fierce competition, price wars and inadequate airport infrastructure, with Kingfisher one of the worst-hit firms.

The airline has said "positive and immediate action is being taken on all fronts to cut costs".

Kingfisher's market share has slid to fifth position at 11.3 per cent, from second earlier, according to data on the civil aviation regulator's website.

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SBI has no plans to lend more to Kingfisher Airlines: Pranab

State Bank of India has no plans to lend more to debt-laden carrier Kingfisher Airlines, Finance Minister Pranab Mukherjee said on Tuesday.

Kingfisher has cleared all its tax and interest dues up to August 2011, Mukherjee told lawmakers in a written reply.

Meanwhile, Kingfisher chief Vijay Mallya says pilots have been spoken to and the issue of delayed salaries is being sorted out.

Kingfisher Airlines, headed by liquor tycoon Vijay Mallya and named after his famous brand of Indian beer, has been struggling to continue its normal operations as a heavy debt load, higher jet fuel costs, stiff competition and low fares have severely hurt its ability to raise funds.

The airline, which has a debt of about $1.3 billion, needs at least $400 million soon to keep flying, according to the Centre for Asia Pacific Aviation, an industry consultancy.

"We are seeking help from the banking sector to de-freeze our accounts," Mallya added.

Kingfisher had posted losses of Rs 444 cr in the quarter that ended in December 2011. It has ben operating on a trruncated flight schedule after the Service Tax department froze its bank accounts due to non-payment of dues. Kingfisher Airlines has also been suspended from the IATA clearing house (ICH) for not paying its dues.

Additionally, the battered airline owes Rs 40 crore to the Central Board of Excise and Customs, which has threatened legal action if the airline does not pay on time. The CBEC has also frozen the airline’s bank accounts.

With inputs from PTI; Original content by Thomson Reuters 2012

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Kingfisher misses deadline for clearing dues, more accounts frozen

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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