Saturday, November 12, 2011

Directorate General of Civil Aviation seeks Kingfisher’s fleet schedule; 50 more flights cancelled

New Delhi: Ailing Kingfisher Airlines, which cancelled more than 160 flights over the last six days, has been asked by aviation regulator DGCA to give details of their plan to reconfigure its fleet to prevent a large-scale flight disruption.

Maintaining that it has received some "interim replies" from liquor baron Vijay Mallya-owned carrier, sources in the Directorate General of Civil Aviation said it was awaiting more details as it has been found that the airline was not operating flights as per the approved winter schedule.

Mallya, meanwhile, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"

In another tweet, he posed: "Is it Kingfisher's duty 2 fly on loss making routes when state governments tax heavily? Or should v be financially prudent n fly profitably".

Kingfisher, which has been cancelling over 30 flights each day since Monday, had yesterday cancelled 40 services across its network.

DGCA, which issued a show-cause notice to Kingfisher in this regard, has also sent similar notices to IndiGo and SpiceJet and asked them to submit their cancellation details.

"When the schedule for winter was approved, it was with immediate effect. So we took a stock of the position and on that basis, we asked them to explain," DGCA chief E K Bharat Bhushan said.

He also warned that if the airlines were found not operating the slots allotted to them, these will be given to others who are willing to operate "regardless of who it is".

Meanwhile, Kingfisher Airlines cancelled up to 50 flights on Saturday leaving passengers in the lurch for the sixth consecutive day and triggering a surge in airfares.

The airline has plans to cancel more flights till November 19.

According to reports, the airline is operating only 270 flights on Saturday. The airline is now getting oil on cash and carry bases, reports added.

The airline owes huge amounts to oil companies, the Airports Authority of India and private airport operators GVK and GMR Group. The airline has not posted any profit since its launch five years ago, and reported a net loss of Rs 1,027 crore last fiscal and Rs 263 crore in the last quarter.

Mallya, who was not in the country, apparently asked the government to intervene in the matter by encouraging banks to give it credit and to buy more time from oil marketing companies (OMCs).

Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit as well as bank guarantees. Kingfisher is also believed to have sought soft payment options from oil companies for jet fuel.

However, official sources said, "No bailout was being granted to Kingfisher by the government."

The sources said the airline was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.

Civil Aviation Minister Vayalar Ravi had yesterday said the entire aviation industry needed help especially to meet the crisis caused by rising jet fuel prices.

Ravi's comments drew sharp criticism from BJP leader and former Finance Minister Yashwant Sinha, who said there was "no case for a government bailout for Kingfisher. We cannot support such a step."

"If Kingfisher Airlines is not in a position to run on a financially viable basis, then it should find its own way. Whether they close, merge or do anything, there are many possibilities but no case for bailout," he added.

The airline on its part said it has not asked for a bailout package but only requested the lenders to increase the borrowing limit.

Congress spokesperson Manish Tewari said it remains to be seen whether in a market economy the government will walk the extra mile to bail out a private company or should allow the shake-out to take place and the fittest to survive.

While Kingfisher officials were closeted with their legal and financial advisors till late last evening, the airline's lenders have also begun deliberations to consider if the struggling airlines' debt could be restructured.

Overall, banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs 7,700 crore to the airline.

The recent turmoil in the airline started after it reduced 32 flights from its daily schedule, a move which the company said was taken to rationalise route plans and improve yields.

"As per the revised schedule, it will offer 300 daily flights connecting 54 cities as compared to its previous schedule of 340 flights," the statement said.

However, this was seen only as another sign of distress by the stock markets.

Also, the airline saw about 100 pilots quitting recently, the company said such attrition levels were normal for the aviation business.

In the backdrop of a 30 percent increase in jet fuel prices since December 2010, the domestic airlines' are expected to lose Rs 3,500 crore in the first six months of this fiscal.

Kingfisher, which has a Rs 6,000 crore debt, took various steps like hiving off low-cost operations and restructuring a part of its debt.

The stocks of the airline had yesterday plunged to an all-time low to 19.1 percent in early trading on the Bombay Stock Exchange to a record low before recovering to 9.45 percent. The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore.

http://zeenews.india.com

No comments: