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Debt Crisis at Kingfisher Airlines Makes it Sell Property
By siliconindia
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Tuesday, 15 November 2011, 00:34 IST
Innumerable passengers across the country cancelled Kingfisher flight tickets to travel by other airlines, though after paying 20-40 percent higher at the last moment. The airline, which had earlier said it would restore its flights after October 19, has now indicated that it would take a few more weeks to normalize the flight schedule, which would go into the peak winter season air traffic.
DGCA has issued the notice under Rule 140(A) of the Aircraft Rules, 1937, asking Kingfisher why it had not taken the regulator's prior approval to curtail its flight schedules as required by this rule. It has also sought to know whether the airline had taken any step to facilitate the passengers inconvenienced by the cancellations.
Meanwhile, all the oil PSUs, HPCL, IOC and BPCL, have denied extending credit line to the liquor baron Mallya-owned airline and asked it to pay for lifting jet fuel on a daily basis. The airline has suffered a loss of 1,027 crore in 2010-11 and has a mounting debt of 7057.08 crore.
The board of Kingfisher Airlines (KFA) will consider a proposal to cut debt by more than half by selling property, converting loans from its parent company into equity, and changing the terms under which it leases aircraft. The management of the airline, which has cancelled 200 flights in the past week, leading to fears it is close to bankruptcy, says its plan will result in debt coming down from Rs 6,500 crore to Rs 3,000 crore.
