No cash and no CEO? Put up the 'For Sale' sign, Mr Mallya

Well, it looks like Kingfisher Airlines is back to square one - teetering at the edge of a financial abyss. Only this time, no one seems ready to talk the airline out of taking a swan dive.

Following media reports that said the State Bank of India would provide fresh funds for cash-starved Kingfisher Airlines, the bank has clarified that it is not giving any fresh loans to Kingfisher since the airline’s existing dues had already become a non-performing asset (NPA).

Even the Income Tax Department, it seems, has refused to lift the freeze on the airline’s accounts (the department had frozen the accounts last week because the airline had not paid service tax dues of around Rs 60 crore). On Wednesday, media reports said the freeze had been lifted.

There is talk that some of the other lenders of the 18-bank consortium that had lent to the airline earlier(for whom the airline’s dues have not yet turned into an NPA) might lend some funds in proportion to their current exposure, but even that doesn’t seem likely to happen in a hurry.

That leaves the airline struggling to continue its daily operations, which are shrinking rapidly by the day. In a revised plan submitted to the Directorate General of Civil Aviation, the airline curtailed its operations to 175 flights a day with 28 aircraft, down from more than 340 flights with 64 aircraft in November.

More interestingly, Mint, quoting three unnamed sources, reported that CEO Sanjay Aggarwal had submitted his resignation and that he would continue only until the end of March. Kingfisher chairman Vijay Mallya responded with a terse “not correct” mobile text message when the question was put to him, the newspaper said. Aggarwal, who was appointed CEO on 30 September 2010, didn’t respond to calls and text messages, it added.

It’s the second time this rumour has surfaced; in December, Business Line had speculated that Aggarwal had quit .

It’s strange: there’s so much news about the company every day; yet, the airline is going nowhere.

Here’s a snapshot of everything that is going wrong with Kingfisher right now:

• The airline has no money to pay its staff salaries. Indeed, it has no money to pay its bankers, oil suppliers, aircraft lessors or the tax authorities.

• Its operational aircraft fleet has fallen by more than 50 percent to 28. Since 17 February, it has cancelled more than 50 flights a day.

•More than half its senior pilots have left, according to some media reports.

•Mint reports that CEO Sanjeev Aggrawal might also be quitting.

•Travel agents are becoming wary about booking flights for passengers on the airline.

•The airline is currently hunting for someone to lend it money for working capital - funds required to operate a business on a daily basis - of up to Rs 400 crore at least. So far, bankers have been unwilling to lend further funds.

•There is absolutely no way it can pay off its debt (more than Rs 6,500 crore). While it’s true the debt might not be repayable for several years, the fact is the company has no money to pay for anything right now, forget several years down the line.

•Promoter Vijay Mallya still refuses to bring in further equity himself to get operations back on track at the sinking airline. It’s possible that he is unable to because the rest of his business empire might be on shaky ground as well, according to a Business Standard report. In any case, there’s reasonable ground to suggest that he’s not throwing everything, including the kitchen sink, at the airline to resolve its problems. If he isn’t showing much inclination to pump more funds into his airline, why should anyone else?

•Finally, this is an airline that has never made a profit since it was launched in 2005. So, never mind whether crude oil prices are at $30 or $120, or whether passenger traffic is good or bad, this is an airline that just does not know how to make money.

Frankly, Kingfisher Airlines would save a lot more money if it just shut down. Or is sold to someone who knows how to run the business. It’s time to put up the “For Sale” sign, Mr Mallya.