Kingfisher pays part salaries for February
06 July 2012
Kingfisher Airlines has started paying February salaries to employees, a spokesman for the carrier said today. The measure would provide some measure of relief to frustrated staff, including pilots who recently threatened to go on strike.
The debt-stricken airline, which had a debt burden of $1.4 billion at the end of March, has faced staff agitation over non-payment of salaries and was under pressure from lenders to come out with a turnaround plan.
Yesterday, bankers participating in a meeting of 17 lenders to the airline in Mumbai asked the management to pay fees on the guarantees and letter of credit which was due for renewal. They called on the management to prepare a concrete plan on settling dues.
The management, represented by CEO Sanjay Aggarwal and UB Group chief financial officer Ravi Nedungadi, told the banks that they were not in a position to pay any money immediately. They added talks were on with private and foreign players to secure equity funding.
Kingfisher has shut most of its operations after it was hit with severe cash crunch which left it with little money to pay for fuel, aircraft leases and salaries. It has less than 20 aircraft at its disposal.
The airline has borrowed over Rs7,500 crore but has failed to make timely payments. Most banks have classified the account as a sub-standard loan, meaning it was one on which the borrower had defaulted. The banks were not willing to lend more cash since the account was already classified as a bad loan and fresh lending would be seen as a window dressing - an attempt to cover stress assets.
According to reports, the company was raising funds from within the UB Group.
Meanwhile, IBN quoting sources said that the March salaries would be cleared in the next 10 days and that communication on salary dues to others would be made later in the day.