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Kingfisher seeks govt bailout
Tribune News Service

New Delhi, November 11
Beleaguered Kingfisher Airlines today sought a government bailout on a day when its shares crashed to a record low amid continuing debt fears, as it cancelled more flights for the fifth straight day, with 40 flights being cancelled.

Even though the Civil Aviation Minister Vayalar Ravi has ruled out any bailout package for the company, the debt-ridden airlines may get some help from the government in the form of assistance from banks.

Shares plunge As analysts expressed concern over its future, shares of Kingfisher Airlines went into a free fall. The stock fell to Rs 17.55 per share, down sharply from its 52-week high of Rs 91 per share.

Ravi today said he would talk to Finance Minister Pranab Mukherjee to ease the turbulence in the Vijay Mallya-promoted carrier with the help of loans from banks - a statement that evoked a strong reaction from the BJP and left the ruling Congress playing safe.

Ravi said the Finance Minister might speak to banks in this connection, but a debt recast like the one done for Air India was not possible.

The minister said he was talking to state governments for reduction of sales tax on aviation fuel.

Sources said Mallya has put forward a case before Mukherjee and Ravi to help Kingfisher in infusion of funds through banks at low interest rates, besides other concessions.

Kingfisher has lost over Rs 1,000 crore in this financial year and bank loans worth Rs 7,000 crore have hit the airline’s performance hard. Shares of the cash-strapped carrier slumped 18% to a new low on Friday.

Industry sources said lessors of Kingfisher’s leased turboprop ATR aircraft fleet have put the airline on notice and want urgent payments for the lease.

The carrier also has unpaid dues to the operators of airports and other agencies, which have also been putting pressure on it to expedite payment. Oil PSUs HPCL, IOC and BPCL have denied extending credit line to the airline, asking it to pay for lifting jet fuel on a daily basis.

Apart from taking aircraft off flights to reconfigure and install business class seats in them, the airline’s CEO Sanjay Agarwal was quoted as saying that the airline had decided to reduce frequency on some of the routes where it was operating multiple flights like Delhi-Mumbai or low passenger load as part of route rationalisation to improve profitability and revenue productivity of the flights.

The civil aviation regulator DGCA has issued a notice, asking Kingfisher why it had not taken the regulator’s prior approval to curtail its flight schedules. It has also sought to know whether the airline had taken any step to facilitate passengers inconvenienced by the cancellations.

The suggestion that the government was considering stepping in to help billionaire Mallya’s debt-ridden company prompted senior BJP leader and former finance minister Yashwant Sinha to say, “If Kingfisher is not in a position to run on a financially viable basis, it should find its own way ... There is no case for a government bailout.”

While privately, many in the Congress agreed that the logic put forth by Sinha was right, officially, the party came out with a much calibrated response.

“In a liberalised economy, the profitability or the aggregation of losses should be best left to market forces. However in a specific case, looking at sectoral implications, whether any relief is warranted or should be provided is best left to the judgement of the minister and the ministry concerned,” Congress spokesman Manish Tewari said.