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Tuesday 23 October 2012

Kingfisher Airlines offers to pay three months' salaries



Mumbai: Even as aviation minister Ajit Singh told NDTV that it was "'unrealistic" to expect Kingfisher Airline to fly again, talks with between the troubled carrier's management and employees ended inconclusively this evening. "Kingfisher has taken its employees for a ride," Mr Singh told NDTV. (Unrealistic to expect Kingfisher to fly again, says Ajit Singh)

The management has offered to pay salaries for three months, in a staggered manner, over October and November and has given the employees till Thursday to get revert. But the employees refused the offer so far. They are demanding that at least four months' salary be given to them for them to consider returning to work.Pilots as well as engineers were part of this meeting. (Kingfisher crisis: Top 10 Developments)

"We have talked about there being three (months') salaries to be paid before Diwali. We will know the logistics, but the intention is everyone should be back at work in a day or two," Aggarwal told reporters."We expect employees will be at work by October 26," he said.


Kingfisher Airlines' licence suspended by aviation regulator

While Mr Aggarwal seemed confident that most employees will return to work, a section of the workers remain equally adamant. "So many times in the previous times, you haven't kept by your word. How do we trust that you will give our dues? Give us four months salaries, that was our demand, we will come and resume the work," said SC Mishra, the spokesperson for the engineers in the airline. "One employee's wife has already committed suicide due to sheer pressure. How many dead bodies do you want to see?," he said.

What could create a problem for the employees on strike is that there seems to be a split between the pilots and the rest of the staff. Sources within Kingfisher told NDTV that at least 80 per cent employees are unhappy with the management's offer, but if there is a split, then they might have to give in to the pressure. Employees are likely to meet the management again tomorrow for  a "final offer".

Kingfisher's licence was suspended on Saturday after it failed to address the civil aviation regulator's concerns about its operations, forcing the debt-laden carrier to stop taking bookings. The carrier is seven months behind on salary payment.

Today's meeting was the first one between the two sides after Kingfisher Airlines' licence was suspended on Saturday after it failed to address airline regulator Dirctorate General of Civil Aviation's concerns about its operations, forcing the debt-laden carrier to stop taking bookings.

Controlled by Vijay Mallya - the self-styled "King of Good Times" - and seven months behind on salary payments among other missed bills, Kingfisher's fleet has been grounded since the start of the month when a staff protest turned violent. The airline, which has never made a profit since being founded in 2004 and reeling under $1.4 billion of debt, will have its licence reinstated if it provides a plan that satisfies the Directorate General of Civil Aviation.

The company's steep decline has underlined the problems of operating in India's airline sector, where players grappling with rising fuel costs face aggressive pricing caused by overcapacity.

The suspension signalled the regulator's lack of patience with Kingfisher after months of cancelled flights and staff walkouts, and marked a rare tough stance by the government against a high-profile corporate. "The actual position is not changed because of this order," Kingfisher said in a statement. "We have, in any case, always maintained that once the issues with the employees are resolved, we will first present our resumption plan to DGCA for review, before resuming operations".

Mr Mallya, a liquor baron who owns a Formula 1 motor-racing team, is famous for lavish parties at his $16 million beachside villa in Goa and also his company's annual swimsuit calendar.

The licence suspension, until further notice, was announced by Arun Mishra, director general at the DGCA.The move had been widely expected after Kingfisher failed to respond properly to queries from the regulator regarding its ability to provide a "safe, efficient and reliable service".

"The suspension of Kingfisher's licence is unfortunate but not unexpected," Amber Dubey, director, aerospace and defence at KPMG India, said in a statement. "Kingfisher's ability to bounce back from this situation appears challenging."

Kingfisher Airlines employees to meet Management


Striking employees of Kingfisher Airlines Sunday said they will meet the management to find a solution to the 20-day strike that has crippled operations and led the Directorate General of Civil Aviation (DGCA) to suspend the carrier's licence.
"We will hold a meeting with the management tomorrow (Monday) in Mumbai. We also want the airline to start operations and to become viable again," a senior official who is on strike told IANS in New Delhi.
"We will consider any offer presented by the airline which is logical and meets the minimum criteria of our demands," the official added.
Nearly, 6,500 employees of the airline face the possibility of losing their jobs if the airline continues to be in a state of lockout, which has been extended till Oct 23.
The average monthly wage bill of the airline is said to be around Rs.21 crore.
The employees went on a flash strike Oct 1 demanding payment of their salaries by by Oct 5, which have been pending since March.
They also claimed that non-payment of salaries has affected their morale and built up stress levels that can also affect operational safety.
Key personnel like aircraft maintenance engineers, whose airworthiness clearance is mandatory for any flight to take off, also struck work.
Civil Aviation Minister Ajit Singh said Saturday: "If they are not able to provide any concrete revival plans on how to restart operations and to pay their employees, then the DGCA may cancel their licence."
Singh's comments came after the DGCA suspended the airline's operating licence, citing its inability to provide any reasonable revival plans.
The airline Friday extended till Oct 23 the lockout declared Oct 1 after negotiations with striking employees failed.
The airline had the lowest market share in September, which stood at 3.5 percent. The airline has a total debt of Rs.7,000 crore from a consortium of banks.
Bankers are scheduled to hold a meeting Monday to decide on the fate of their exposure to Kingfisher Airlines. If they decide on writing off bad debt owed by the airline, it may have a negative impact on their quarterly performance and will also affect the scrip price in the equities market.
According to a report by the Centre for Asia Pacific Aviation (CAPA), Kingfisher Airlines may have to shut down operations if $600 million is not infused in it in the next two months.
The company reported a net loss of Rs.650.78 crore ($117 million) for the quarter ended June 30.
Currently, the airline has only 10 operational aircraft from a strength of around 66 planes a year ago. It was also the country's second largest airline by passenger traffic.


The company's scrip at the Bombay Stock Exchange (BSE) on Friday closed 4.58 percent down and stood at Rs.11.45 from its previous close at Rs.12.


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