Kingfisher woes: Will Mallya bid goodbye to Kolkata?

Mumbai: Kingfisher Airlines has decided to cancel all bookings from Kolkata beginning February 25 as employees in the city went on strike over non-payment of salaries and the possibility of a shutdown of operations there.

The employees had claimed that they had heard that the airline’s counter at the airport would be closed from February 20 and feared that they would not be paid their salaries.According to a Times of India report, rumours about the airline shutting down its Kolkata base did the rounds in the travel trade circuit all evening on Friday.

Various reports have said the airline has been struggling to pay employee salaries for last couple of months, while it has accumulated a debt of over Rs 10,000 crore.

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Meanwhile, lenders to cash-strapped Kingfisher Airlines on Friday failed to finalise a deal for providing additional funds to the firm despite six hours of discussions, until late last night, although the company’s chairman Vijay Mallya said it was a “long, good and comprehensive” meeting.

The marathon meeting of 18 bankers- including the top officials of SBI, Bank of Baroda and Corporation Bank - remained inconclusive and will be held again to decide if additional funding could be provided to the to debt-laden airline, sources said.

[caption id=“attachment_217583” align=“alignleft” width=“380” caption=“In Kolkata, Kingfisher flight count dropped from 24 daily departures in 2010 to 16 in 2011. At present, it operates just five flights. Reuters”]  [/caption]

The meeting began at around 4 PM on Friday and continued till about 10 pm here to discuss working capital and other loans for Kingfisher. Yesterday, it posted net loss of Rs 444 crore for this fiscal’s third quarter, ended December, and is battling spiralling interest and fuel costs.

A senior banker, present at the meeting, said that the lenders were appreciative of the “viability report” prepared and circulated by SBI Capital, the advisor to Kingfisher, but could not reach unanimity on the final package. After the meeting, Kingfisher chief Vijay Mallya told reports that “it was a very long, good, comprehensive meeting,” but refused to divulge any details.

Kingfisher owes an estimated Rs 1,500 crore to SBI, about Rs 400 crore each to Corporation Bank and Bank of Baroda and Rs 380 crore to Federal Bank, among other lenders.

SBI had last month said it would be difficult for lenders to provide more funds, unless Kingfisher pays Rs 100 crore to restore a bank guarantee invoked after the carrier failed to repay its loans or makes good the default.

On Thursday, auditors of Kingfisher Airlines had raised concern over its ability to stay afloat and said it would need to inject more money to remain a “going concern”. ‘Going concern’ means that the firm in question would not go broke or be liquidated and remain operationally afloat in the foreseeable future.

In a quarterly report, Mallya said that the latest financial statement had been based on the premise that “the company is a going concern”, but conceded that “the company has incurred substantial losses and its net worth has been eroded”.

Agencies