Kingfisher mess: Govt steps in, banks may help

New Delhi: Kingfisher Airlines, facing severe financial crunch, may finally get some help from the Government even as Civil Aviation Minister Vayalar Ravi on Friday ruled out any bailout package for the company. Sources say that Union Finance Minister Pranab Mukherjee may speak to banks to bailout the Vijay Mallya-owned airlines which is floating in the red and has been unable to even pay salaries for October to its employees.

"There is problem with aviation industry as a whole. The fuel price hike and the continuous sales tax imposition by the states is one of the major problems. Mallaya complained to me, he told me that HPCL had refused to give Kingfisher fuel last week," said Ravi.

Ravi suggested that the Finance Minister may ask the banks to give loan to Kigfisher Airlines to help it tide over the financial crunch.

Government of India has never said for a package. Even he (Mallya) has never asked for it, he never discussed it. The banks have to help him. We want them to fly. We hope the banks to help them," added the Civil Aviation Minister.

Banks had stopped giving loans to the Kingfisher which has suffered a loss of Rs 1027 crore in 2010-11 and has a debt of over Rs 7057 crore. The airline also owes more than Rs 200 crore to three oil companies - HPCL, IOC and BPCL - in dues. The oil companies have stopped granting credit to Kingfisher for lifting jet fuel and put it on a cash-and-carry payment mode.

The company's stocks were also hammered at the Bombay Stock Exchange on Friday and plummeted almost 19 per cent to an all-time low but recovered slightly later in the day.

Kingfisher has been forced to cancel several flights in the last few days leading to chaos and the airports and causing inconvenience to its passengers.

Even on Friday 50 pilots and cabin crew did not report for duty claiming sickness resulting in over 40 Kingfisher flights being cancelled. Nearly 130 pilots have quit Kingfisher in the last couple of days following non-payment of their salaries for the month of October.

Kingfisher has been forced to ground one third of its 66 aircraft fleet cancelling over 130 flights over the last three days.

"Decision to reschedule and cancel flights was taken to cut losses. We are only ensuring loss minimisation by flight rationalisation and enhanced revenue through reconfiguration," Mallya said on Thursday.

Meanwhile, there is more trouble for the airline after ground handling company Celebi threatened to stop servicing Kingfisher till outstanding dues are paid.

The DGCA had on Wednesday had issued a notice to Kingfisher under Rule 140 (A) of the Aircraft Rules, 1937 for not taking prior approval before cancelling flights.