There is some good news for employees of the ailing Kingfisher Airlines. Lenders have decided to release money from bank accounts for paying their salaries. The move follows the income tax department's decision to lift the freeze on these accounts.
The amount to be released for payment of salary is over Rs 30 crore. Some amount of money may be released for meeting operational expenses as well.
Senior public sector bank executives confimed that their task was made easier due to the income tax department's move to lift the freze on some of the accounts. The lenders, who met today, reviewed situation and decided to allow salary payment in the interest of the employees of the bealeagured airline. "The concern of employees is a paramount issue. We have decided to release money for payment of a month's salary and some essential operational expenses”.
The meeting did not take any decision on recovery proceedings. “Our exposure (loan amount) is so huge that sale of assets (which are collateral) are not adequate to meet obligations", another PSB executive associated with meeting said.
The crisis in Kingfisher Airlines worsened as the reconciliatory talks between the management and striking engineers and pilots over payment of salary since March this year failed. Employees had rejected the offer of part payment and vowed to continue their agitation.
Kingfisher has outstanding debt of over Rs 7,000 crore and is a non-performing asset on the books of most banks including State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank.
The airline’s loans were restructured in November 2010 under industry dispensation, giving it a breather to manage during stressful times. Kingfisher began to default on payments and turned non-performing asset for most lenders in the third and fourth quarter of 2011-12.
At the last meeting with lenders in Bangalore on September 27, the airline’s management did not present a satisfactory road map for tackling the crisis and begin repayments. The company, though, repeated its demand for immediate funding assistance.
