Ailing carrier Kingfisher Airlines said on Tuesday it has temporarily suspended operations to several destinations as per its revised flight schedule, and has asked most employees at those places to “stay at home.”
“We are in a ‘holding’ pattern right now and are waiting for various decisions from the government and our consortium of bankers on FDI (foreign direct investment) policy, working capital funding, etc,” Kingfisher said in a statement.
“All of these will have a major impact on the staffing decisions we will have to make,” the statement said.
Kingfisher said the employees will remain in its rolls until it can recapitalise the company and resume operations to the affected destinations.
Cash-strapped and debt-laden, Kingfisher has slashed its operating schedule and is scrambling for financing from creditors as its losses grow in India’s fiercely-competitive airline industry.
Kingfisher will operate about 120 flights with 20 planes this summer, according to its revised schedule, the statement said, a far cry from operating 370 daily flights with 64 planes just last September.
The union government’s plans to allow foreign airlines to invest up to 49 per cent in local carriers – for which Kingfisher has lobbied hard – has not yet materialised, adding to its fund constraints.
“Our immediate priority is to access our funds to pay outstanding staff salaries,” Kingfisher said.
In another blow to the airlines, ICICI Bank has asked the embattled airline to top up its loan security or adjust the loan amount after the ailing carrier’s stock was pounded in recent weeks.
Kingfisher shares, which traded as high as Rs 90.15, 16 months ago, on Tuesday closed just a tad above their lifetime low at Rs 16.60 on the National Stock Exchange.
If Kingfisher fails to turnaround the airline, its banks, which own $1.3 billion in loans, would be left to pick over the carcass in a country that does not have a formal bankruptcy process.
Loans are secured in part by a combination of guarantees by the airline’s parent, the UB group, as well as Kingfisher shares, Mallya’s personal guarantees, its Mumbai real estate assets and the Kingfisher brand itself, bankers said.