Vijay Mallya is broke. Much of his time goes on working out his debt

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Flying low Kingfisher may even need to be put on a cash-and-carry regimen
Flying low Kingfisher may even need to be put on a cash-and-carry regimen

KINGFISHER AIRLINES

By Samiran Saha

VIJAY MALLYA, chairman of Kingfisher Airlines, is these days seen more in the corridors of Rajiv Gandhi Bhavan that houses the Airports Authority of India (AAI) office in New Delhi, than at his sprawling headquarters on Bengaluru’s Vittal Mallya Road. His visits, according to people working out of the Bhavan, are not to seek permission to start a new airline venture. They are aimed at having the repayment of his huge debts deferred.

Mallya owes enormous sums to airports — for using their landing and navigation facilities; and to the oil marketing companies that fuel his 70-strong aircraft fleet. He also recently met Petroleum Secretary S Sundareshan to discuss the defaults.

According to the AAI, the custodian of all airports in the country, Kingfisher Airline owes over 200 crore to different airports — double the bank guarantee it has kept with the body. The GMR group, which runs the Delhi and Hyderabad airports, and the GVK group that runs Mumbai’s Chattrapati Shivaji International Airport, are even contemplating putting the airline on a “cash-and-carry regimen”.

If that happens, Kingfisher will have to pay cash to utilise airport services, which include fees for landing, navigation, parking bays and various other utilities.

According to GVK and GMR officials, Kingfisher has, for long, been defaulting on payments and has cleared only a part of its dues: another tranche is awaited.

The airline’s woes do not end at the airport. State-run oil marketing company Hindustan Petroleum Corporation Ltd (HPCL), which fuels Kingfisher’s aircraft, had a tough time getting its outstanding payments. “We had to ask the government to intervene so that the vigilance department wouldn’t come knocking at our doors,” says an oil marketing company official. Recently, Minister of State for Petroleum Jitin Prasad said in the Rajya Sabha: “Kingfisher Airlines has been put on a cash-and-carry arrangement by HPCL as they (the airline) have been unable to fulfill the obligations.”

Kingfisher has an overdue of Rs. 275.82 crore, and has cleared only a part of its debts

The airline buys about 1,300 kilolitres of jet fuel worth 133 crore every month on a 60-day credit cycle. However, the cash-strapped airline has defaulted on payments on several occasions; like when it failed to pay up Rs. 224.95 crore, beyond the agreed credit period, as on 31 March. Together with interest on late payment of Rs 50.87 crore, Kingfisher has an overdue of Rs. 275.82 crore.

The airline is also learnt to have sought a two-year moratorium on all loan repayment. Kingfisher has asked SBI Caps to restructure finances and is planning to raise $200 million through the global depository receipts issue.

But it refused to comment. “We do not discuss supplier and partner relationships in public,” says a spokesperson for the king of good times — now fallen on bad times.

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