NEW DELHI: Beleaguered Kingfisher Airlines got some relief on Tuesday after banks gave some guarantees and working capital loans and the income tax department indicated that it may defreeze the airline's bank accounts.
The State Bank of India threw in a lifeline of around Rs 1,200 crore to the troubled airline, including working capital of Rs 400 crore, bank guarantee of Rs 500 crore and loan repayment extension worth Rs 250-300 crore. Besides, either SBI or Punjab National Bank will issue another guarantee of Rs 160-200 crore on Wednesday to the IT department to defreeze Kingfisher's account.
While this may give some breathing space to the airline and help it pay its employees by the end of this month, its problems with the regulator and cancelled flights continued to persist. Aviation regulator DGCA said that it was not taking any punitive action against the airline for its last-minute flight cancellations, but was also not fully convinced with the explanation offered by the airlines' top bosses.
"The DGCA doesn't seem to be fully satisfied with whatever explanation the Kingfisher top brass had to make in today's meeting," senior officials who were a part of the meeting told ET, on conditions of anonymity. Sanjay Aggarwal, the CEO of Kingfisher Airlines met the DGCA to explain the sudden cancellation of flights. On Monday, the airline sent out a press statement blaming the disruption on the freezing of accounts by the income tax department, which affected the company's ability to make operational payments leading to flight cancellations.
However, sources say that the director general did not find much merit in that explanation.
"Blaming flight cancellation on the IT department freezing accounts doesn't look like an acceptable excuse to the authorities. The DGCA is aware that the airline had withheld tax payments to the IT department for long and it is not a valid reason for flight cancellations," sources said.
Meanwhile, the airline has also committed to the DGCA to clear all December salary dues by end of this month. The airline has faced strike threats several times from its employees in the past few months over non-payment of salaries.
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