Analysts says Kingfisher needs about $400 million in fresh capital.
The solution may rest with a new government initiative to allow foreign direct investment in domestic airlines. That proposal could gain momentum with the prime minister, Dr. Manmohan Singh, taking charge of the finance portfolio. Kingfisher’s chairman, Vijay Mallya, reportedly met with the premier shortly after he took charge of the finance ministry.
Meanwhile, around 200 pilots and engineers have been on strike since July 1 because of the airline’s failure to pay employees for the past five months. This strike has resulted in the cancellation of at least four flights from Mumbai and completely halted Kingfisher’s ATR operations, according to reports.
Earlier this year, airline employees went on strike but soon returned to work after an assurance by the management to pay staff. However, the cash-strapped airline has not only failed to pay its employees since February, its has also defaulted on its debts to oil companies and airports and service taxes to the government.
For 2011-12, Kingfisher’s losses stood at 23.28 billion rupees ($420.3 million); total debt exceeds 70 billion rupees.
A320-200 photo: Kingfisher