NEW DELHI (Reuters) - The aviation minister warned Kingfisher Airlines (KING.NS) that its licence may be cancelled if safety norms and financial viability conditions are not met.
Kingfisher Airlines, which has debt of $1.3 billion, is scrambling to raise funds as banks have refused to lend more for day-to-day operations. A massive cutback in flights has reduced its revenue, leaving the carrier with little cash to pay its employees, airports and tax authorities.
Vijay Mallya, the flamboyant liquor baron who owns a majority of Kingfisher, was due to meet the aviation regulator later on Tuesday or Wednesday, said Aviation Minister Ajit Singh.
“If he gives a plan and says I have that many planes, that much schedule, then why should we cancel?,” Singh said.
“The problem is, last two-three months, he has given several plans and he has not adhered to any of them,” Singh said.
Shares of Kingfisher Airlines, which has a market capitalisation of about $200 million, hit an all-time low in early trade on Tuesday. At 12.43 p.m. (0713 GMT), they were down 6.2 percent at 18.85 rupees in a flat Mumbai market.
(For graphic on India's airline market, click link.reuters.com/zum46s)
“As a government, we don’t want to shut down any industry. There are employees and customers involved. Kingfisher had 22 percent traffic. If we close it suddenly, where will the fares go?,” Singh said.
Adding to its mounting woes, Kingfisher’s last independent director quit on Monday.
Reporting by Anurag Kotoky; additional reporting and writing by Swati Pandey; Editing by Tony Munroe and Rajesh Pandathil