Wednesday, May 18, 2011

Kingfisher beats deadline, clears MIAL dues

Mumbai: Vijay Mallya-owned Kingfisher Airlines has averted a major crisis by clearing airport charges dues with the Mumbai International Airport Ltd (MIAL). The airport operator had given the airline a deadline of 14 May to clear dues outstanding from last year December.

"We have received a cheque payment for Rs105.71 crore and with that the issues regarding payment default has been resolved. The airline can operate normally from our airport," Mumbai International Airport president Rajiv Jain said.

MIAL had threatened to put the Bangalore-based carrier on a cash-and-carry mode of operations if it failed to clear dues by 14 May.

Last year December Kingfisher had promised to clear dues by February, but the cheque issued by it bounced.

Kingfisher restructured Rs750 crore of its overall debt of Rs6,900 crore last November.

Currently in the sixth year of its operations, Kingfisher Airlines is yet to turn the corner. It is likely to post losses in the fourth quarter as well.

On 6 April a consortium of 13 banks, led by the State Bank and ICICI Bank, converted Kingfisher's Rs750 crore debt into 23.37 per cent equity, valuing the airline's share at Rs64.48. With this conversion of equity shares, the promoters holding in the airline has declined to 58.6% from 66.2%.

The carrier hopes to raise around $300 million from a global depositary receipts issue once market conditions stabilise and its share price regains some of its lost value.

Govt wants AI to raise fleet utilisation

The civil aviation ministry wants Air India to increase fleet utilisation. The move would cap the discontent among pilots at not having enough flying hours and even help the state carrier gain grounds in terms of passenger carriage.

Air India needs to increase its fleet utilisation so that the pilots get to log more flying hours. There are various requests pending with the airline and they should start flights to those sectors,” said a senior ministry official, who did not want to be identified.

The official said even the low-cost carrier IndiGo’s aircraft utilisation is over 12 hours. “There is enormous scope for Air India to increase its fleet utilisation and the planes they have should fly more,” he said.

Air India’s aircraft utilisation is nine hours. If the airline increases its fleet’s utilisation by three hours per aircraft, it will give the airline around 400 extra flying hours to be distributed among 1,500 pilots.

Recently, around 800 pilots of erstwhile Indian Airlines went on a 10-day strike after demanding an increase in their salaries, which had been impacted because of the fall in flying hours. The Indian Airlines pilots are paid on the basis of flying hours whereas the erstwhile Air India pilots get fixed pay only to exceed if the pilots fly over 80 hours in a month. The pilots alleged their flying hours have fallen to less than 60 hours a month from 80 hours a month earlier. They met officials in the civil aviation ministry with their demands.

The airline is also losing market share rapidly and has become the fourth largest carrier in terms of passenger carriage, losing its third place to IndiGo Airline.

Read more on - business-standard.com