Kingfisher Airlines on Tuesday said it had temporarily suspended operations from several major cities — including Kolkata and Hyderabad — and asked nearly half its 7,000-odd employees to stay at home till it managed to infuse fresh funds.
The fate of its employees hangs in the balance, with the airline saying its staff retention would be subject to the government decision on foreign direct investments in civil aviation and the availability of additional funds from banks.
“We are waiting for various key decisions — the government’s on FDI policy and our consortium of bankers’ for working capital funding. These will have a major impact on the staffing decisions we will have to take. We would dearly like to retain our staff, who have been incredibly dedicated and loyal under extremely trying circumstances. Our immediate priority is to access our funds to pay outstanding staff salaries,” the airline said in a statement on Tuesday.
With a reduced fleet and a substantially lower scale of operations, the airline may have to trim workforce. It has been operating 120 flights with 20 planes in its summer schedule and has suspended operations at various cities, including Ahmedabad, Hyderabad, Kolkata and Lucknow. The staffers at these stations have been asked to stay at home while being on the company’s rolls.
The carrier has stopped international flights as well.
Six months ago, it had planned its winter schedule with 64 aircraft, but, with several of those grounded and being returned to lessors, the airline will operate 120 flights with 20 planes in its summer schedule. Kingfisher Airlines has defended the curtailment of its schedule and the suspension of operations at some airports, terming downsizing a “holding plan”.
It said in a statement, “holding plan” had been put in place, pending re-capitalisation and return to full utilisation of the aircraft fleet. “In this holding plan, we have taken adequate care to ensure part of our core inter-metro schedule is retained, while connectivity is maintained to many cities where we are the sole operator. This is to ensure that public interest is not compromised,” the statement read.
The airline is also in talks with some of its business associates for additional funding. Last year, promoters of Balaji Distillers, long-time distillers of the UB group lent Rs 700 crore to the airline through optionally-convertible debentures. These were converted into stocks in early 2012. Senior UB Group officials say there is a possibility of these associates further supporting Mallya to recapitalise Kingfisher Airlines.
The airline has been unable to raise loans from banks with its debt turning into non-performing assets. Yesterday, ICICI Bank, the country’s largest private sector lender, asked it to top up security for its Rs 600-crore loan. The carrier said it had paid Rs 44-crore dues to the income tax department, as directed by the Income Tax Apellate Tribunal and that this its bank accounts should be de-frozen.
