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K'fisher Struggles To Stay Afloat, Govt Rules Out Bailout

New Delhi, Feb 20: As beleaguered Kingfisher Airlines today struggled to stay afloat after further large-scale flight disruptions, Government today ruled out any bailout for the private carrier.“No, government is not going to have any

PTI [ Updated: February 20, 2012 21:06 IST ]
k fisher struggles to stay afloat govt rules out bailout
k fisher struggles to stay afloat govt rules out bailout

New Delhi, Feb 20: As beleaguered Kingfisher Airlines today struggled to stay afloat after further large-scale flight disruptions, Government today ruled out any bailout for the private carrier.


“No, government is not going to have any bailout,” Civil Aviation Minister Ajit Singh told reporters here, adding, “Government cannot go around asking banks to lend money (for private airlines)”.

“As far as Kingfisher or any other private airline is concerned, they have to present their business plan to the banks and if they (banks) are satisfied with that, and if it is within RBI guidelines, then they will lend money,” he said.

The crisis for the cash-strapped airline grew deeper with at least 30 flights being cancelled today, including those to Bangkok, Singapore, Kathmandu and Dhaka, leaving hundreds of passengers stranded at various airports across the country.

Today's cancellations included 14 from Mumbai, seven from Kolkata and six from Delhi.

Concerned over the sudden cancellations and passenger inconvenience, aviation regulator DGCA summoned the airline's CEO Sanjay Agarwal and top officials to appear before them tomorrow to explain the large-scale disruptions in the operations and the reasons.

Under Rule 140(A) of the Aircraft Rules, 1937, airlines need prior approval of DGCA to curtail their flight schedules.  Any violation can amount to cancellation of the flight permit of an airline, as an extreme step.

Meanwhile, the Vijay Mallya-owned airline, whose bank accounts have been frozen for non-payment of taxes, virtually blamed the Income Tax authorities for the large-scale flight disruptions, saying freezing of the accounts had led to the curtailment in its services.

”Shutting down the airline will not help the passengers.

Let us see their report (to be submitted to DGCA), what are their plans. ...whatever little number of flights they are operating right now, if you suggest to shut them down, it will not help the passengers. I don't think that is the right thing to do,” the Minister said, when asked whether the ailing carrier should be shut down.

Kingfisher, which suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057.08 crore, posted a Rs 444 crore loss in third quarter this fiscal.

“We are enquiring what are their problems, what they are doing. Our primary concern is that whatever they are flying, passenger safety has to be ensured. No compromise on that,” Singh said, adding that it had slashed “too many flights”.

A day ahead of Kingfisher top-brass meeting it, the DGCA was in the process of gathering information from all centres across the country on the cancellation and major delays of Kingfisher flights.

Based on this information as well as what the airline submits to it, the aviation regulator would decide on what action to take under the Aircraft Rules.

In a statement, the airline said, “The prime reason for the current disruption in our flight schedules is the sudden attachment of our bank accounts by the I-T department. This has severely affected our ability to make operational payments leading to the present curtailment.”

It said the employees' “salaries can be paid and the grounded aircraft can be recovered quicker once the bank accounts are unfrozen and the schedule restored on priority.”

Regarding negotiations with its prime lenders over the weekend in Mumbai, he merely said, “We have had a constructive meeting with our bank consortium last week” and added that the airline has “not approached the government for any bailout.”

At least 34 pilots of struggling Kingfisher Airlines have quit earlier this month, with the total number rising to about 80 since last October, industry sources said today.

The sources said 34 pilots, both commanders and co-pilots, had put in their papers as of five days ago. Another over 40-cockpit crew had earlier resigned. However, there was no confirmation from the airline about these resignations.

Kingfisher has been suffering from a severe cash crunch that has culminated into the Income Tax authorities freezing its bank accounts last week on grounds of non-payment of tax dues.

Reports also suggested that a large number of ground staff, mostly on contract, were also put on notice by the cash-strapped carrier and their contracts not renewed.

Trouble had started in Kolkata last Friday when the airline announced it would stop operations for four days, leading the employees at the airport to demand their salaries and finally staging a walkout, leaving passengers in the lurch.

The airline today said in a statement that “employees salaries can be paid and the grounded aircraft can be recovered quicker once the bank accounts are unfrozen and the schedule restored on priority.”

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