Hindustan Petroleum Corporation Ltd (HPCL) has agreed to resume supply of aviation turbine fuel (ATF) to Kingfisher Airlines after late night negotiations today.
Several Kingfisher flights were delayed this evening after the state-run retailer suspended fuel supplies to the airline over non-payment of dues. This was the second time in two months when the aviation turbine fuel supply to the airline was "temporarily suspended''.
Vijay Mallya-owned Kingfisher Airlines owes HPCL around Rs 130 crore. In July, HPCL had put Kingfisher on cash-and-carry and stopped jet fuel supplies after the private carrier’s outstanding exceeded the bank guarantee. Soon after, Kingfisher paid Rs 10 crore and supply was resumed.
The airline later termed the matter a minor issue. “Due to a minor issue with one of our ATF suppliers, there was a temporary disruption of flights. The matter has been clarified and supply has been commenced,” it said.
Kingfisher has been facing severe financial problems. It has not made profit even once since its launch five years ago. It was the only listed airlines to end 2010-11 with a loss of Rs 1,027 crore. It has a debt of over Rs 6,000 crore after a part of the debt was restructured with approval from banks. The restructuring required conversion of the lenders’ debt of Rs 1,355 crore and the promoters’ debt of Rs 648 crore into share capital.
Even after the restructuring, it is in a financial crisis and has defaulted on payments to oil marketing companies and airport operators.
