Kingfisher curtails international operations

The UB Group, which owns cash-strapped Kingfisher Airlines, will provide the Airports Authority of India (AAI) a corporate guarantee for Rs 250 crore, the amount owed to the latter. "I have been (so) assured by Kingfisher," said AAI chairman V P Agarwal.

This came even as the airline seemed set to sink further, with an announcement that it was curtailing international operations. The airline was flying to eight international destinations, ranging from neighbouring countries to London.

"We are curtailing our wide-body overseas operations that are bleeding heavily. To this end, we have already returned one Airbus A 330-200 to the lessor in the UK. Positive and immediate action is being taken on all fronts to cut costs," a statement from Kingfisher said. Watchers indicated a possibility of aircraft being impounded, an aspect which could not be confirmed.

AAI had put Kingfisher on a cash-and-carry mode. The carrier also has to pay oil companies, which have stopped fuel supply to the airline twice, owing to non-payment and delay in payments.

As for the partial shutting of international operations, a company spokesperson declined to spell out which destinations had been curtailed. Usually, wide-bodied jets such as the A 330-200 are used to connect to London from India. In addition, it was connecting to Hong Kong, Singapore and Bangkok, beside Dubai, Dhaka, Colombo and Kathmandu.

Kingfisher had got the rights to fly to global destinations even before the stipulated five years of flying within India, on the basis of acquiring Air Deccan. Group chairman Vijay Mallya's dream was to also connect Bangalore to San Francisco with an Airbus-380. The international ambitions have dwindled during the past six months. The process of joining the Oneworld Alliance was called off, as was one for a code-sharing pact with British Airways.

The airline said despite the shortage of crew, it was operating around 100 flights a day, from the earlier peak of 350 a day. At one time with 66 aircraft, it is now operating a little over 20 and has been curtailing connectivity within India, too.

The company has again said external factors are responsible for its current state of affairs. Kingfisher has also been suspended from the International Air Transport Association network, as pending dues were not paid, as a result of which the load factors have been plummeting. The bank accounts have been frozen by the tax authorities as service tax has not been paid.

“We continue to work with the tax authorities to arrive at a solution to de-freeze our accounts as early as possible," the statement added. However, the tax authorities (Kingfisher owes Rs 400 crore to them) told Business Standard they were working to recover as much of the dues as possible, as they anticipated a ‘worst case scenario’, hinting it may be an “end-game” for the airline.