Friday, 26 October 2012

Kingfisher Airlines Thursday reached a settlement with employees by offering to clear three-months of overdue salary by mid-November. The airline, controlled by Vijay Mallya, hadn’t paid most of them since March.




Kingfisher Airlines Thursday reached a settlement with employees by offering to clear three-months of overdue salary by mid-November. The airline, controlled by Vijay Mallya, hadn’t paid most of them since March.

This ends a 25-day strike by the airlines pilots, engineers and technicians that forced the airline to cancel flights indefinitely. But the ailing carrier’s troubles are far from over.

On Oct. 20, India’s aviation regulator suspended the Kingfisher’s license as the airline failed to produce a plan on how it will revive its operations.

On Monday, Chief Executive Sanjay Aggarwal said it will take Kingfisher at least two weeks to submit a fresh operations plan.

This means it will already have lost potential revenue for more than a month if it resumes operations as quickly as is feasible. The bigger problem for Kingfisher, however, is that taking to the air may not be the answer to its financial problems. Because of the high cost of jet fuel and low seat occupancy on Kingfisher flights, the company may lose less when its planes are on the ground.

“Kingfisher loses 80 million rupees ($1.49 million) every day that it flies, and 40 million rupees every day that it doesn’t fly,” India’s aviation regulator Arun Mishra told India Real Time, citing figures given to him by Mr. Aggarwal, Kingfisher’s CEO. Neither Kingfisher’s spokesman Prakash Mirpuri  nor Mr. Aggarwal could be immediately reached for comment.

It’s worth noting that the airline also has assured payment of only a part of the overdue compensation owed to employees and said the rest will be cleared once it raises cash.

Where that cash will come from is unclear. Mr Mallya has said he is in talks with foreign investors, including overseas carriers, to sell shares in Kingfisher. Analysts said he would find it difficult to attract outside investment after the recent crisis.

“Revival of Kingfisher Airlines was earlier, and now as well, totally dependent on its promoters raising a minimum of $600 million, which is highly unlikely,” said Kapil Kaul, south Asia head for Sydney-based CAPA-Centre for Aviation. He said the airline’s turnaround would cost $1 billion.

Kingfisher, named after India’s most popular beer brand, has been unprofitable since its inception in 2005. The airline has piled up losses of about $1.9 billion between May 2005 and June 30, according to CAPA.

Kingfisher also still has its huge debt load to carry. The airline owes about $2.5 billion to lenders, leasing companies, suppliers and majority shareholders. Lenders have refused to give it any more money, and are now trying hard to recover their debt.

On Thursday evening, Mr. Mallya said on social networking site Twitter: “All Kingfisher Team members back at work and fully supportive. I sincerely thank all of them for their faith and continuing commitment.” He may require even more of them yet.






UB Group to fund airline, Kingfisher tells DGCA
Times of India
NEW DELHI: With no funds flowing from any quarter like bank loans or equity infusion through FDI,Kingfisher Airlines CEO Sanjay Agarwal on Friday told DGCA chief Arun Mishra that the airline would be supported financially by the parent UB Group.
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UPDATE 1-Kingfisher to use own funds in bid to resume service -regulator
Reuters
Carrier has not flown since start of month. * Staff agreed on Thursday to return to work. * Shares rise by daily limit for second straight session (Adds details, quotes, background). By Arup Roychoudhury. NEW DELHI, Oct 26 (Reuters) - India's ...
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Both Air India & Kingfisher in crisis, but AI crew command higher market value
Economic Times
Air India staff, often seen as relatively dowdy compared with the suave Kingfishercrew, are heaving a sigh of relief . By virtue of working in a public sector organisation, their jobs are secure, and their comparatively higher experience means they ...
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Economic Times
Kingfisher has to satisfy DGCA: Ajit Singh
IBNLive
Cash-strapped Kingfisher Airlines employees resumed work on Friday after striking a deal with the management and agreeing to the staggered salary payment schedule proposed by the company. Reports said that many of them have received the salary for ...
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India's Kingfisher to arrange own funds to restart airline-regulator
Reuters
Kingfisher Airlines, owned by liquor-baron Vijay Mallya has not flown since the beginning of this month, after an employee protest turned violent, and India's civil aviation regulator on Saturday suspended the carrier's license over safety concerns ...
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Kingfisher woes may lessen if it pays 10% loans to lenders
Business Standard
Lenders may give a fresh lease of life to Kingfisher if the beleaguered airline repays about 10% of the outstanding loan amount of over Rs 7,000 crore immediately. Banks which have given loans toKingfisher may consider this option when its consortium ...
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India's struggling Kingfisher airline 'to fund itself'
AFP
NEW DELHI — India's struggling Kingfisher Airlines told regulators on Friday that it had sufficient funds to restart operations in a bid to convince them to reinstate its flying licence, an official said. "Kingfisher officials say they can fund their ...
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Kingfisher Airlines tycoon Vijay Mallya claims relief at losing billionaire tag
Economic Times
MUMBAI: It might be considered the latest blow to his troubled empire, but KingfisherAirlines tycoon Vijay Mallya professed relief on Friday at losing his billionaire ranking in Forbes magazine. Mallya, known as the "King of Good Times" and the owner ...
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Economic Times
UB Group will fund Kingfisher' revival: Sources
IBNLive
In the latest twist to the Kingfisher Airlines crisis, sources on Friday said that the money to revive the cash-strapped airline will come from Vijay Mallya's UB Group as there is no investor available in the near term. Kingfisher CEO Sanjay Aggarwal ...
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Kingfisher's long, winding path to flight resumption
Firstpost
Kingfisher Airlines will now not only have to pay four months' salary dues — about Rs 80 crore — to its employees by December, it will also have to clear dues it owes to airport operators, oil compa



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