Moneycontrol
Nov 11, 2011 03:33 PM IST | Source: IBNLive.com

Is Kingfisher Airlines close to shutting down?

Cash strapped Kingfisher Airlines is in trouble. Top sources say the airline may have to shut down if they don't secure working capital loans soon.

Is Kingfisher Airlines close to shutting down?

New Delhi: Cash strapped Kingfisher Airlines is in trouble. Top sources say the airline may have to shut down if they don't secure working capital loans soon.


The airlines grounded one third of its 66 aircraft fleet cancelling over 80 flights over the last two days. The Director General of Civil (DGCA) could take the airline to task.


Kingfisher Airlines chief Vijay Mallya on Thursday said, "Decision to reschedule and cancel flights was taken to cut losses. We are only ensuring loss minimization by flight rationalization and enhanced revenue through reconfiguration."


Over 100 Kingfisher pilots submitted their resignations as they did not receive their salary for the month of October.


The cash-strapped airline claimed that it had to drop flights as the company were trying to reconfigure its aircraft.


There was chaos at several airports after passengers complained that they were not intimated about the Kingfisher cancellations. Many inconvenienced passengers had to rebook themselves on other airlines paying a premium of up to 20 per cent.


As a result of the cancellations, most domestic flights and some international ones will now remain cancelled till November 19.


The DGCA issued a notice to Kingfisher under rule 140 (a) of the aircraft rules for not taking prior approval before cancelling flights. In the notice, the DGCA asked the airline to show cause why it had not taken the regulator's prior approval to curtail its flight schedules as is required by this rule.


Aviation sources said the airline has grounded eight of its leased turboprop ATR aircraft. Airport operators, too, are putting pressure on the airline to clear their dues relating to airport and other charges.


Three oil companies - HPCL, IOC and BPCL, have stopped granting credit to Kingfisher for lifting jet fuel and put it on a cash-and-carry payment mode even as Kingfisher CEO Sanjay Agarwal said that the situation was much better now.


The oil companies allege that Kingfisher owes them almost Rs 200 crore in dues.

Kingfisher has suffered a loss of Rs 1027 crore in 2010-11 and has a debt of over Rs 7057 crore.

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