Kingfisher Airlines expects to start operations in 4-5 days, says vice-president

Kingfisher Airlines expects to resume operations in four or five days after about 100 pilots and engineers in Delhi agreed to return to work, Sanjay Bahadur, vice president of corporate affairs, told reporters on Thursday. The airline expects to pay salaries for March within a week, he added.

Sanjay Bahadur, vice president of corporate affairs, also said the airline expects to pay salaries for March within a week.

However, it may not be that easy to resume operations because the government has said that the airline will be allowed to resume operations only if the aircraft’s engineers certify the airline safe to fly. (Read: No end to Kingfisher crisis as deadlock continues: top 10)

If salaries are not paid in the next few days, the airline faces a potentially prolonged shutdown. Its salary backlog goes back to April. The government is taking a tougher stance now after allowing the airline to operate for months without paying salaries, although it has stopped short of forcing a closure of the heavily indebted carrier. (Read: Uncertainty looms over Kingfisher resuming operations tomorrow)

CEO Sanjay Aggarwal is dashing across the country today and tomorrow to meet employees in an attempt to defuse the crisis at the beleaguered airline. The partial lockout at the airline was scheduled to end today, but talks between the management and striking employees in Mumbai yesterday failed.

The talks between the airline’s management and striking employees hit a cul de sac after Mr Aggarwal told the staff that the airline could pay only a month’s salaries in the next 10 days, but that the payment of future salaries was uncertain as the airline did not have money. In an email sent out later in the night, he said he would meet employees in Delhi at 9 a.m. and the Bangalore staff at 4 p.m. today. He is scheduled to meet Chennai employees tomorrow morning.

BALL IN KINGFISHER’S COURT

Not mincing words, Civil Aviation Minister Ajit Singh today said the government needs concrete plans, not status reports, from the airline on how it will operate, maintain schedule and if its aircraft are safe to fly. The ball is in Kingfisher’s court, he added. (Read More)

Mr Singh said he has yet to see the interim report of aviation regulator, the Directorate General of Civil Aviation (DGCA), on the airline submitted yesterday.

In its interim report to the Civil Aviation Ministry on the crisis, the DGCA is understood to have referred to the six-day strike by engineers and pilots over non-payment of salaries, followed by the partial lockout, and said that safety of operations has been seriously jeopardised. (Read More)

The regulator is also believed to have said that non-payment of salaries was a matter of serious concern, not only for the employees but also affected safety as those seriously affected were manning flight operations.

“I don’t want to make any value judgments… my job is to make sure they follow all the safety regulations and their planes are safe,” Mr Singh said.

Under the DGCA norms, airlines are not allowed to fly unless they have a fit to fly certification from engineers.

The whole winter schedule, including routes and landing spots, need to be looked at by the end of October and landing spots have to be considered afresh, he added.

LENDERS’ BIGGER CASUALTY

As the situation unfolds, Kingfisher’s lenders, expressed hope that the management will not let the airline go belly up, and said banks would be a bigger casualty if it were to go bust, according to an agency report. (Read More)

When asked about whether banks are looking at recovery measures by monetising the collaterals, an official at a public sector bank said by doing that lenders will not be able to recover even 10 per cent of their outstanding loans to the airline.

The Vijay Mallya-owned airline and its promoters have most of their shares and assets pledged with banks, including the brand Kingfisher (pledged for a value of Rs. 4,100 crore) and two of its properties -- the Kingfisher Villa in Goa and the Kingfisher House in Mumbai, together valued at around Rs. 200 crore.

When asked about the amount that banks are looking at as fresh capital infusion by the airline for a fresh lifeline, he said normally a corporate debt restructuring (CDR) involves the promoters bringing in at least 25-30 per cent of the overall CDR package in fresh equity. At 25 per cent, this works out to be around Rs. 1,750 crore as the airline's outstanding principal alone is over Rs. 7,000 crore.

STOCK CRASH

Shares in Kingfisher Airlines dropped for a fourth consecutive day Thursday, after slumping nearly 5 per cent in each of the previous three sessions. (Read More)

Last week, the Bombay Stock Exchange had halved its circuit limits on the stock, capping the maximum movement in a day at 5 per cent following a sharp rally in the share prices in the past few days.

Kingfisher's 270 engineers went on strike on Sunday and were joined by the airline's pilots on Monday. The pilots and engineers have formed two separate associations to protest against non-payment of salary since April this year. The company has had to ground its 10 operational planes and no Kingfisher flight has taken off since Monday. The debt-laden airline declared a partial lockout late that day. 

With inputs from Agencies