No more loans for Kingfisher; DGCA issues notice
06 Oct 2012
Flamboyant liquor baron Vijay Mallya's high-flying days look increasingly numbered, as his financially crippled Kingfisher Airlines is coming closer by the day to being grounded for good.
The airline's lenders, led by State Bank of India, have refused to advance any more money. At the same time, the Directorate General of Civil Aviation has issued it a show-cause notice asking why its permit should not be cancelled. Meanwhile, its unpaid pilots and engineers continue to abstain from work.
The DGCA notice issued on Friday asks Kingfisher to respond with a detailed plan within 15 days. The airline has been asked to explain the abrupt cancellation of flights and its inability to adhere to schedules. If the airline fails to give a satisfactory response, its licence stands to be suspended or cancelled.
On the money front, SBI chairman Pratip Chaudhuri said on Friday that the bank cannot release any more funds to the airline. He added that the tax authorities have unfrozen 80 per cent of the airline's accounts, and there is no room for more loans to the airline.
On Thursday, the consortium of 17 banks led by State Bank of India, Kingfisher's main lenders, agreed to release Rs60 crore to the airline after an emergency meeting at SBI Bhawan in Mumbai. The Income Tax department also lifted the freeze on Kingfisher's accounts.
However, this amount will barely cover two months' salary of the striking staff, unpaid since March. The management has tried all this week to talk them back to work, but with no success. While talks with chief executive Sanjay Agarwal Mumbai and Delhi failed, the staff from Chennai and Bangalore refused to even meet him.