India’s aviation minister on Monday virtually sounded the death knell for the cash-strapped Kingfisher Airlines, saying it would be “very difficult” for the ailing carrier to resume operations.
The statement comes after the aviation regulator on Saturday suspended the flying licence of the debt-laden airline, which has grounded its fleet since Oct. 1 due to a crippling strike by employees over unpaid salaries.
Kingfisher, promoted by liquor baron Vijay Mallya on its best-selling beer brand, owes billions of dollars in taxes, airport fees and to staff who have not been paid for the past seven months and are on strike.
“It would be very difficult,” Ajit Singh, India’s civil aviation minister told New Delhi Television on Monday, when asked if Kingfisher could start flying again.
In a desperate bid to bring the staff back to work, the carrier on Monday proposed to pay employees three months of pending pay by Nov. 13, the Hindu festival of Diwali.
Kingfisher shares have fallen 29 per cent on the Bombay Stock Exchange since the labour unrest began.
Relations between management and staff reached boiling point last month after the company declined to commit to a date for settling its debts, prompting employees to walk out.
Mallya is desperately seeking a foreign buyer to save it from complete collapse, but many analysts are doubtful any rescue is possible.
Kingfisher was India’s second-largest airline until a year ago but now it has a market share of just 3.5 per cent, the smallest of the country’s carriers.
Local banks – which own a quarter of Kingfisher – have rejected a request from the company for another loan.
At least 4,000 of Kingfisher’s staff – which includes pilots, engineers and ground staff – have not been paid salaries since April, despite previous promises.
Kingfisher employees “must be feeling that they have been taken for a ride,” Mr. Singh said.
“There were continuous e-mails, discussions and assurances that they would be paid … they (employees) had hope they would be paid. It must be a very sad experience for them,” he added.
A report by the Centre for Asia Pacific Aviation, a Sydney-based consultancy, says Kingfisher’s debts total $2.49-billion including bank debts of $1.1-billion, and it had accumulated losses of $1.9-billion.