Oct 202012

Aviation regulator Directorate General of Civil Aviation (DGCA) may suspend the licence of Kingfisher Airlines today for failing to come up with a viable financial revival plan, sources have said.

The Vijay Mallya-promoted airline was to respond to a show-cause notice issued by the regulator by today (October 20), but that seems unlikely as the airline has sent out a request for more time to do so.

The DGCA will consider all legal implications before suspending the licence, the sources said. It had asked the airline, which has not operated a single flight since 1 October, to explain why its licence should not be cancelled.

In a statement issued on Friday, the debt-laden airline said it had written to the aviation regulator seeking time on the show-cause notice, and added that it was extending its partial lockout until October 23. In a second extension (the first being until 12 October), the lockout is scheduled to have today (October 20).

“The management hopes to resume operations on November 6,” Friday’s statement added.

The airline was forced to declare a lockout and suspend flight operations after its 250 engineers went on strike on September 30.

They were later joined by pilots.

The employees are protesting against non-payment of salaries and dues, and have said that work will resume only after all dues are paid and assurances are given that salaries will be paid on time.

Several talks between the staff and the management have failed.

On Friday, Kingfisher statement quoted Prakash Mirpuri, the vice-president of corporate communications, as saying, “We had a positive meeting with employee representatives on October 17 and are hopeful of reaching common ground when we meet again next week.”

Shares in Kingfisher Airlines dropped 4.8 per cent on Friday ahead of the October 20 deadline to respond to the civil aviation authorities. The DGCA had told the airline on October 5 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 reply.

Kingfisher had previously grounded flights until October 20, but the industry regulator on Wednesday had rejected Kingfisher’s winter schedule.

The airline currently has only 10 operational aircraft compared to 66 planes a year ago.

The Vijay Mallya-owned airline is reeling from a $1.4 billion (Rs. 7,524 crore) debt. It has accumulated operating losses of Rs. 8,000 crore.

Lenders to the airline earlier this month agreed to release Rs. 60 crore from an escrow account to keep the airline afloat. An escrow account, which prevents a default in loan obligations by a company, ensures that funds received by a company cannot be accessed by it but goes directly to the lenders.

After the restructuring of loans to Kingfisher Airlines in 2010-11, its lenders had taken charge of cash flows, including funds received through ticket sales. The airline needs Rs. 55 to 60 crore to pay salaries for two months.

So far, the meetings between the management and the striking employees have failed to end the impasse. A crucial meeting on Thursday also could not arrive at a conclusion. The management has assured payment of a month’s salary which is not acceptable to the staff.


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