Mumbai airport gets tough with Kingfisher over pending dues

New Delhi : Concerns grew over Kingfisher Airlines’ ability to operate out of Mumbai airport which threatened to put the airline on a cash-and-carry basis — or pay upfront — after non-payment of dues. But airline chairman Vijay Mallya made light of the fears that passengers may be rendered stranded.

“What’s big thing about cash and carry? We pay on weekly or daily basis, people pay. And flights will operate to the full schedule,” Mallya told reporters outside the finance ministry here when asked about the situation.

“Everybody has different credit terms for customers. Passengers have to first pay for tickets before they travel. That’s also cash and carry. When we advertise on newspaper or channel, we also have to pay, that’s also cash and carry.”

The development comes a day after GVK-led Mumbai International Airport Ltd’s (MIAL) threatened to place the airline on a cash-and-carry basis by Saturday if the carrier failed to clear Rs.90 crore in dues which are pending for the last six months.

When asked about plans for roping in a new investor to help the cash-strapped airline, Mallya told a television news channel: “That’s going on, things do take time, particularly negotiations.”

Mallya did not divulge the name of the investors.

The fresh trouble for the airlines comes as it struggles to cope with its financial liabilities, arranging funds and recasting its debt with lenders.

Earlier, the airline’s vice president (corporate communications) Prakash Mirpuri said: “We would like to reassure all our guests that all our flights will continue to operate, as per the revised schedule published on our website.”

If Kingfisher Airlines fails to pay up by Dec 3, it would need to shell out Rs.60 lakh per day for operations from the Mumbai airport.

Currently, the airline operates flights out of Mumbai.

In ‘cash-and-carry’ mode, an airline has to pay upfront every time it purchases services and fuel from vendors, as credit privileges of the company are revoked.

In the case of airports, an airline has to pay for infrastructure it is using like terminal building, lounges and operating charges like parking, housing and landing (PHL).

State-run Airports Authority of India (AAI) has already put Kingfisher Airlines on cash-and-carry basis for all of its airports.

The company currently owes Rs.240 crore to the AAI. The airline also owes huge amounts to oil companies and GMR Group-led Delhi and Hyderabad airports.

Recently, the airline also curtailed 50 daily-flight operations, citing technical and route rationalisation issues.

The airline has not posted any profit since its launch five years ago and reported a net loss of Rs.1,027 crore last fiscal and Rs.468.66 crore in the last quarter.

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