Airline executives have reportedly offered staff three of seven months’ pay they are owed in bid to get planes flying again
Executives from troubled Kingfisher Airlines, run by the Indian tycoon Vijay Mallya, have met employees to try to thrash out a deal over the seven months of pay they are owed as a first step to getting planes airborne again.
Controlled by the flamboyant Mallya – the 56-year-old self-styled “King of Good Times” – Kingfisher’s fleet has been grounded since the start of the month when a staff protest turned violent.
Its licence was suspended on Saturday after it failed to address the Indian regulator’s concerns about its operations, forcing the debt-laden carrier to stop taking bookings.
According to local press reports, the company’s 6,500 staff were offered one month’s pay immediately, another after three working days and a third after the major festival of Diwali in the first week of November.
Kingfisher refused to comment on Monday’s meeting, which was described as “inconclusive” in the local media.
Launched in 2005, Kingfisher Airlines was intended to break the mould of Indian air travel by being glamorous, good-looking, efficient and fun.
Mallya featured in the carrier’s in-flight videos, welcoming passengers and boasting in a characteristic plummy drawl of “personally picking” cabin staff and instructing them to treat passengers “as if you were a guest in my own home”.
Mallya, who inherited the United Breweries conglomerate from his father, epitomised the new breed of Indian businessman: confident, exuberant, exhibitionist and extremely wealthy. He lives in a vast seaside palace in Goa and sits in parliament as an independent senator.
The troubles of Kingfisher have contributed to a broader realisation in India that years of explosive economic growth are coming to an end.
Recent forecasts have put growth in GDP for this year at between 5% and 6%, dropping from 7% last year, and having hit 9.5% in 2010.
There has been much local criticism of Mallya. The Times of India newspaper accused the tycoon of leaving his employees “in the lurch” as the airline ran into problems.
The launch of a promotional video covering the search for models for the Kingfisher annual calendar by the tycoon’s son also provoked an angry response.
The airline has never made a profit since being established in 2003 and owes more than £1bn. It will only have its licence reinstated if it provides a plan that satisfies the Directorate General of Civil Aviation (DGCA).
A complete cancellation of the licence was unlikely, said a government source, who declined to be named.
The suspension signalled the regulator’s lack of patience with Kingfisher after months of cancelled flights and staff walkouts, and marked a rare instance of the government taking a tough stance with a high-profile company.
“The actual position is not changed because of this order,” Kingfisher said in a statement this weekend. “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.”
Indian passengers have already been hit by price hikes for domestic travel of up to 50%. Though demand remains high, cut-throat competition and high fuel prices have caused problems for many Indian carriers with only one posting a profit.
Analysts have said Kingfisher needs an infusion of at least $1bn (£625m) to stay afloat. Many of its debts are to public institutions such as the State Bank of India.
A recent move by the government to allow greater investment in domestic airlines from overseas has come too late to help the company, analysts said.
Later this week Mallya’s Formula One team, Sahara Force India, will race in the country’s second grand prix. The tycoon and Dutch businessman Michiel Mol bought the Spyker F1 team for €90m (£75m) in 2007.
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