MIAL to put Kingfisher on cash-and-carry mode

Kingfisher Airlines' woes are set to worsen.

For, the Mumbai International Airport Limited is from this Saturday putting the airline on a cash-and-carry mode, as the cash-strapped airline has not paid it Rs 90 crore towards landing, parking and other charges.

In fact, the GVK Group-run MIAL issued a notice to the airline on Thursday.

The MIAL action comes on the heels of a similar action proposed by Airports Authority of India.

Cash-and-carry mode means an airline has to pay airport charges every time it takes off and lands, and a failure to do so could lead to grounding of its flights.

AAI has issued a notice to the UB Group-owned airline for not clearing dues up to Rs 240 crore, according to a report. It said the airline's chairman, Vijay Mallya, met AAI chairman V P Agarwal assuring timely payments of dues.

Today, an MIAL source said Kingfisher had not paid dues for six months.

The amount due includes interest cost as well.

The airline has 42 daily departures from Mumbai, and may have to curtail operations in case it was unable to reach an amicable settlement.

It is the second time this year that Mumbai airport has warned the airline to clear dues or accept a cash-and-carry mode.

Earlier, the GMR Group runs Delhi and Hyderabad airports, had warned of similar action.

A Kingfisher spokesperson said the company would not -- 'as a matter of policy' -- comment on supplier and partner relationships.

"Our flights will continue to operate as normal as per the revised schedule," is all he would say.

Experts say Kingfisher has initiated measures to regain passenger confidence. Points out Pradip Lulla, ex-president of Travel Agents Federation of India:

"We do receive queries from anxious passengers, but their operations have now been streamlined.

"The airlines' sales representatives are visiting agents assuring that operations are normal.

They have reduced fares on economy and business-class segments to lure passengers.

The 2003-founded Kingfisher is facing a serious cash crunch and is in talks with lenders to extend fresh credit line. The Mumbai-based airline had, earlier this year, undergone debt restructuring that helped it reduce the marginally. High fuel and operation costs have led to widening of losses.

Kingfisher, which began flying operations from May 2005, posted a Rs 469 crore (Rs 4.69 billion) loss in the second quarter of 2012.

As on end-September, its dues with Hindustan Petroleum Corporation for aviation fuel was Rs 639 crore (Rs 6.39 billion), petroleum minister Jaipal Reddy informed Parliament last week.

The airline is looking for Rs 700-800 crore (Rs 7-8 billion) of working capital and is also in talks with banks to release Rs 1,000 crore (Rs 10 billion) in deposits with aircraft lessors.

The airline has been forced to trim its operations by withdrawing 50 flights daily to pare its losses.