Mallya: Shutting Kingfisher down not an option

NEW DELHI, India – Beleaguered Kingfisher Airlines’ promoter Vijay Mallya said tonight that he will not shut down the private carrier which struggled to stay afloat after further large-scale flight disruptions and resignation of pilots. “Closing down is not an option. It will not happen. Government does not want it to happen. It is not in national interest,” Mallya said in his first public reaction to the latest crisis that has gripped his cash-strapped airline. “Why should we give up as long as we get help. Help is not bailout. We have asked banks to consider our proposal to provide more working capital,” he said, making it clear that the airline has never asked for a bailout from the government.

In the context of getting help, the liquor baron referred to the government’s decision to allow direct jet fuel imports by the airlines and permit foreign carriers to pick up stake in them. He had lobbied hard with the government on both these issues. Mallya claimed that the entire issue of bailout was of “media making”.

Asked about sudden disruption in Kingfisher flights, the UB Group chief said the bank accounts of the airline were frozen “very suddenly” by the Income Tax authorities over non-payment of tax dues.

“The abrupt disruption was unfortunate because our bank accounts were suddenly frozen by tax authorities. I don’t deny we have taxes due. The bottomline is we requested for time to pay these dues,” Mallya said.

“It was the very sudden attachment of our accounts that obviously crippled us,” he said.

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.

Maintaining that Kingfisher’s financial crunch was reflective of the prevailing state of the aviation industry, Mallya said “we have to make payments every day. Payments are to be made for spare parts, to customs, fuel dues, airport dues. So the ability to operate the bank account is critical”.

“Once we are choked, we obviously have problems. I tried to resolve and negotiate with the tax authorities and tried to agree on a payment plan which is comfortable for both. Our accounts should be de-frozen so that we can continue normal operations. We have the money in the accounts and money is flowing in,” Mallya said.

Asked why the airline did not inform aviation regulator DGCA about flight cancellations, he said “if your bank account is frozen suddenly, obviously you don’t have advance notice by which to notify DGCA. It is self-explanatory.

“With the accounts frozen, the problem started then and there. We didn’t have time to notify anyone. It was only subsequently that we notified the DGCA. We conveyed to DGCA defining the circumstances we were having to suffer,” he said.

Almost 40 flights were cancelled by the airline, including those to Bangkok, Singapore, Kathmandu and Dhaka, leaving hundreds of passengers stranded at various airports across the country. The cancellations included 14 flights from Mumbai, seven from Kolkata and six from Delhi.

Fresh woes for Kingfisher, govt rules out bailout

Wobbling on top of large-scale flight disruptions, beleaguered Kingfisher Airlines faced further problems with 34 pilots quitting and a large number of staff being put on notice even as the government today ruled out any bailout for the airline.

The resignation of the pilots have taken the total number of those who have quit to about 80 since last October, industry sources said today.

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.

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.

Meanwhile ruling out any bailout, civil aviation minister Ajit Singh told reporters here, “Government cannot go around asking banks to lend money (for private airlines)”.

“No, government is not going to have any bailout,” he added.

“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.

Over 30 flights were 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 flights 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.