Kingfisher cannot be closed down because of losses: Ajit Singh

Mangaloretoday/CNN/IBN

New Delhi, Feb 29, 2012: Beleaguered Kingfisher Airlines cannot be closed down just because it is making losses and banks are not helping it out with funds, Civil Aviation Minister Ajit Singh said today.

File photo"You can’t close down a company because they are making losses or banks are not giving them money. As long as passenger safety is not jeopardised, as long as they keep their schedule, why should we close down any industry," Civil Aviation Minister Ajit Singh told reporters here.

 

 

He was responding to a question from reporters whether the Government would take stringent action against the airlines if it flouts rules. His comments came even as the Vijay Mallya-owned carrier was asked by its bankers to infuse fresh equity on its own before they lent it additional funds.

Bank chiefs have been quoted as saying that Kingfisher would need to arrange fresh equity of Rs 1,000-2,000 crore before seeking additional funds from the consortium of banks, led by the State Bank of India.

To another question, the Minister said closing down of any airline would impact passengers. He said Kingfisher has submitted a new schedule of its flights to the Directorate General of Civil Aviation (DGCA) which would closely monitor it.

A consortium of 18 banks, comprising 14 state-owned and four private banks, have provided huge sums to the cash- strapped airlines, which has a total debt of about Rs 7,057 crore and accumulated losses of about Rs 6,000 crore.

The banks are expected to hold meetings with the Reserve Bank of India on the financial mess facing the airline as its loans are reportedly turning to non-performing assets in the past weeks. They are expected to to take a call on whether or not to extend fresh credit line to the ailing carrier.

Kingfisher’s net loss shot up to Rs 444.26 crore for the quarter ending December 31, 2011 from Rs 253.69 crore in the October-December quarter of the previous fiscal. It has suffered a loss of Rs 1,027 crore in 2010-11.

The ailing carrier has been put on cash-and-carry mode by the Airports Authority of India (AAI) as well as the oil companies for airport charges and jet fuel supplies. Compounding its troubles, the excise authorities have frozen the bank accounts of the carrier for its failure to pay service tax dues of about Rs 35 crore. The Income Tax authorities had earlier frozen Kingfisher’s accounts.

As per its new schedule, Kingfisher is now operating about 170 daily flights against over 400 it sought permission for in November. It would not be operating direct flights to some major cities and several Tier-II cities now on, as per the truncated schedule it has submitted to the DGCA.

The airline has also informed DGCA that it would strive to bring in to service in the next week or 10 days 16 more planes in addition to the 28 it has promised to the regulator that it would operate. Of the 64 aircraft fleet, 28 are now operational.

Due to its truncated flight schedule, the airline is likely to lose several prime flying slots, which are a period of time within which a plane has to take-off.