IATA suspends Kingfisher Airlines; oil cos stop fuel supply
In fresh trouble for Kingfisher Airlines, state-owned Hindustan petroleum Corporation Limited (HPCL) Wednesday stopped jet fuel supplies to the ailing carrier due to non-payment of dues which resulted in 6 flights being cancelled in Bombay and some disruptions in Delhi.
New Delhi/Mumbai: In fresh trouble for Kingfisher Airlines, state-owned Hindustan petroleum Corporation Limited (HPCL) Wednesday stopped jet fuel supplies to the ailing carrier due to non-payment of dues which resulted in 6 flights being cancelled in Bombay and some disruptions in Delhi.
HPCL, which is Kingfisher's biggest aviation fuel supplier, stopped refuelling the Vijaya mallya-run firm's airlines at around 1830 hours on Wednesday, a senior company official said.
The cash-strapped airlines, which has over Rs 425 crore outstanding in fuel dues to HPCL, had not been honouring its daily fuel bills, prompting the oil company to snap supplies.
Indian Oil Corporation (IOC) supplies negligible quantifies to Kingfisher while Bharat Petroleum Corporation Limited continues to sell fuel to the airlines on a cash-and-carry basis at some airports.
A spokesperson of Mumbai International Airport Limited said 6 Kingfisher flights have been cancelled since this evening. Irate passengers protested over the last minute cancellations.
At least three Kingfisher flights were delayed in Delhi, airport sources said.
"We first cut supplies to Kingfisher for a couple of hours earlier this month. But it didn't help and we had to snap supplies this evening," the HPCL official said.
Kingfisher buys ATF ior jet fuel worth Rs 4-4.5 crore daily from HPCL. The airline was last year put on cash-and-carry and has to make daily payments before it is supplied jet fuel.
The official said Kingfisher had provided bank and corporate guarantee to cover for the past dues of over Rs 425 crore but HPCL has so far not decided to encash the guarantees.
The decision came close on the heels of global airlines body IATA suspending Kingfisher's participation for not clearing its dues.
The ailing carrier said payments would be made as soon as tax authorities de-froze its bank accounts.
This was the second time in just over a month that the airline was suspended on the same count from the IATA Clearing House (ICH) through which airlines and related firms settle accounts for services provided by them to other such companies.
IATA sources said the suspension means that the airline will not be able to settle their transactions with other ICH members via the IATA Clearing House. It would have to settle its bills with their partners directly on a bilateral basis.
"IATA has suspended Kingfisher Airlines' participation in the IATA Clearing House (ICH). This is because the airline did not settle their ICH account within the stipulated deadline," IATA's Assistant Director (Corporate Communications) Albert Tjoeng said in a statement from Singapore.
He said, "Kingfisher's participation in the ICH will be reinstated after the airline fulfills the ICH requirements."
The airline was earlier suspended from ICH on February two but its status was restored ten days later. It has now been suspended once again, IATA sources said.
Reacting to the development, an airline spokesperson said "due to the accounts getting attached by the tax authorities, we were not able to make a payment to ICH which resulted in a temporary suspension.
"We are working with the tax authorities and expect the accounts to be un-attached shortly. As soon as this is done, we will pay our dues to IATA and get reinstated."
Both IATA sources and the Kingfisher spokesperson said the suspension from ICH would not affect its ticket bookings.
Aggravating the financial woe for the airline, earlier on Wednesday, the I-T Department froze 19 more accounts.
Reports said that the department had recovered only Rs 23 crore so far and the authorities would soon take a decision on attaching Kingfisher's properties. It is likely to freeze UB Group Accounts as well.
Troubles have mounted for Kingfisher as its lenders have insisted they would not pump in money unless the promoters infused fresh equity.
The airline has been told by the bankers that it should get at least 25 percent of the Rs 3,000 crore loan it is looking for in the form of fresh equity. The Airports Authority of India and other airport vendors have also put Kingfisher on a 'cash-and-carry' mode for providing aeronautical services.
Kingfisher had last month also delayed joining the global airlines' grouping 'oneworld' due to its precarious financial position. It was slated to formally join the airline alliance on February 10.
The airline, which never made a profit since inception in May 2005, reported a net loss of Rs 444.26 crore in the December quarter. It suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057.08 crore apart from over Rs 4,000 crore of accumulated losses and a restructured long-term loan of around Rs 7,000 crore.