Kingfisher Airlines' pilots and engineers agreed to the management’s offer of a staggered payment of three months’ salaries before Diwali, and are joining work today, sources said. The staff will get paid salary for March within the next 24 hours and salary for April before the end of the month; salary for May will be paid before Diwali.
However, the airline cannot resume flights unless it gets the go-ahead from the civil aviation regulator, the Directorate General of Civil Aviation (DGCA). The DGCA had not approved the winter schedule of the debt-laden airline even as its fleet has been grounded since October 1 when a staff protest turned violent.
It owes Rs 7,500 crore in debts to a consortium of 17 banks, led by the State Bank of India. The lenders together hold around a 23 per cent stake in the airline since March, after the banks converted their Rs. 6,500 crore of recast debt (after a corporate debt restructuring, or CDR, in November 2010) into equity.
The company's steep decline has underlined the problems of operating in India's airline sector, where players grappling with rising fuel costs face aggressive pricing caused by overcapacity. Kingfisher's troubles will likely help rivals such as Indigo and SpiceJet by lowering capacity on key routes.
"The suspension of Kingfisher's licence is unfortunate but not unexpected," Amber Dubey, director, aerospace and defence at KPMG India, said in a statement. "Kingfisher's ability to bounce back from this situation appears challenging."
The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion.