ibnlive » India

Oct 18, 2012 at 08:33am IST

KFA crisis: DGCA rejects winter schedule, Aviation Ministry hints at licence cancellation

New Delhi: It seems it is end of the road for Vijay Mallya's Kingfisher Airlines? Civil Aviation Minister Ajit Singh on Wednesday said that the airline's license could be cancelled. Meanwhile, there seems no end to the lockout as talks with employees failed again on Wednesday.

In fact the Directorate General of Civil Aviation (DGCA) has blocked out the debt-ridden airlines' winter schedule. No flights have been operating since October 1 after the company ordered a partial lockout over a strike by its employees. And it seems the lockout may continue with yet another failed attempt at talks.

ALSO SEE Kingfisher Airlines extends lockout, to meet staff on Monday again

The employees claimed that they won't return to work until their outstanding salaries are paid. Employees of the beleaguered airline are planning to launch further protests as part of their nationwide agitation over unpaid dues for the last seven months.

Meanwhile, the cash-strapped airline has to reply to the show-cause notice of the DGCA by October 20. The regulator had sent them a notice on October 5 asking why they should not cancel their license as it had grounded its entire fleet and failed to offer safe, efficient and reliable service. It had given the airline 15 days to reply.

Kingfisher, once India's second-biggest airline, last week extended what it has described as partial lock-out until October 12. India recently allowed foreign airlines to buy a maximum 49 per cent stake in local carriers, a move long lobbied for by Kingfisher, although no airline has publicly expressed an interest in investing in Kingfisher.

Kingfisher has been saddled with a huge loss of Rs 8,000 crore and a debt burden of over Rs 7,000 crore, a large part of which it has not serviced since January. Several of its aircraft have been either taken away by its lessors or grounded by the Airports Authority of India for non-payment of dues during the past few months. Kingfisher's net loss in 2010-11 was Rs 1,027 crore and it doubled to Rs 2,328 crore in 2011-2012. The airline also owes money to 17 banks.

Mallya's United Spirits Ltd and Diageo Plc recently confirmed long-rumoured talks for the UK giant to take a stake in India's dominant whisky maker, which could make it easier for Mallya to find funds to rescue Kingfisher. Since India's investment policy change, "the dialogue with potential investors has gathered momentum," Aggarwal said. "Even non-strategic investors are showing interest in investing in Kingfisher Airlines, which is a good sign." Kingfisher has never made money since its launch in 2005, and before grounding its fleet last week, it was flying just 10 planes out of fleet that numbered 64 a year ago.