Should Kingfisher Airlines be allowed to fly again?

GN Bureau | January 17, 2013



The cash-strapped Kingfisher Airline, grounded sinces since October, is planning to resume operations by February-end or March, beginning with seven small ATR planes before gradually increasing the number of aircraft to 20 or thereabouts. In a presentation to lenders earlier, the airline’s promoter, liquor baron Vijay Mallya, had said the plan was to raise the number of aircraft from seven to 21 in four months. In a letter to Kingfisher employees on January 10, Mallya wrote, “The limited restart plan, which we target for the beginning of 2013 summer schedule, requires funding of approximately Rs 650 crore, which is committed to be provided by the UB Group and associates.”

But officials are apprehensive because Rs 650 crore is not an amount that would last the airline for long, and with no ready plan for funds infusion, it could be back to borrowings again. The airline, which has not paid salaries to the staff for over six months now, already owes banks around Rs 7,000 crore. In such a scenario, should the airline be allowed to fly again? Or will it be a drain again for public sector banks?

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