Kingfisher flirting with disaster

India’s debt-crippled Kingfisher Airlines stood on the brink of collapse on Tuesday after nearly a week of flight cancellations and the resignation of dozens of its pilots. Vijay Mallya, who owns a majority stake in Kingfisher, said he was determined to keep the airline flying and blamed a cash crunch on the tax authorities which have frozen its bank accounts over outstanding dues. “I am absolutely committed to keeping the airline going unless some government agency wishes to ground it,” Mallya told reporters. “The point is our banks accounts have been frozen by income tax authorities very suddenly and that has crippled us.” There are no provisions for companies to declare themselves legally bankrupt in India. Analysts said Kingfisher could simply shut down overnight if it fails to secure fresh equity that would shore up the sagging confidence of its creditors. “If they don’t get fresh equity, obviously they are doomed. They don’t have the money for maintenance, for employee salaries, for anything,” Sharan Lillaney, an aviation analyst at Angel Broking, told Reuters. Kingfisher shares plunged nearly 20 per cent on Tuesday ahead of a meeting between the airline’s top executives and India’s aviation regulator, which demanded an explanation for the cancellation of more than 100 flights over the past four days. Of the 64 planes in its fleet, Kingfisher is now using just 28, disrupting the travel plans of thousands of passengers across the country. However, the company’s shares recovered to end slightly higher on hopes that there was still hope after the regulator said Kingfisher had assured it that bank funding was on its way. The regulator gave Kingfisher Airlines 24 hours to come up with a revised schedule for the aircraft still in operation. “A panic button has already been pressed,” said one Kingfisher pilot, who declined to be named. “Everyone is looking out for opportunities. Resignations are unlikely to stop.” He provided Reuters a February 11 company memo to staff which opened with: “Let me start by saying you are the best”, and went on to explain why salaries had not been paid and offered employees a cash advance of Rs5,000 ($100) to help them get by.