Cash crunch, not bird hits, real reason for cancellations: Kingfisher

A new statement by Kingfisher has said that a severe cash crunch was responsible for the grounding of its flights and that it was working to get things back on track.

FP Staff February 20, 2012 17:50:19 IST
Cash crunch, not bird hits, real reason for cancellations: Kingfisher

Kingfisher Airlines has admitted that the real reason for the cancellation of their flights was the attachment of their bank accounts by the IT department. In a statement the company also said that they were presently in talks with the tax department about a pay back plan and the eventual unfreezing of the accounts, and confirmed that they were not seeking a government bail-out.

Cash crunch not bird hits real reason for cancellations Kingfisher

The new statement says that the IT freeze of its tax accounts is the problem: Reuters

Earlier the reasons for cancellation given out by the carrier included bird-hits suffered by its planes.

The fresh statement also says that the company is in talks with the DGCA and was going to appear before it tomorrow to explain the cancellation of flights. They stated that they were willing to give the commission all the information it required, adding that the website had been updated to reflect the current situation. It said however, that they were confident of returning to their full flight schedule as soon as possible, though no concrete time frame was specified in this regard.

The company has also pledged to give stranded passengers a full refund if they so desired it. Hundreds of people were left in dire straits at the airport, even as other airlines capitalized on the situation and hiked fares.

In December, tax officials froze 11 bank accounts of Kingfisher for failing to pay service taxes.

Bank accounts for the company were frozen for two days in November as well, but were subsequently opened up after the airline promised to pay the taxes.

Kingfisher has so far failed in efforts to attract fresh equity. Banks own about a quarter of its shares and State Bank of India, the lead bank, refuses to lend more without an equity injection.

But the airline said it was confident it would be able to raise new funds.

Updated Date:

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