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Ajit Singh rules out Kingfisher closure
Civil Aviation Minister Ajit Singh ruled out the possibility of the closure of Kingfisher Airlines.
He pointed out that the shutting down of the airline will impact jobs. Singh hopes that foreign dirext investment in aviation would be cleared by the cabinet soon.
The DGCA had earlier issued a show cause notice to Kingfisher in February for the suspension of its licence as the carrier was not able to pay salaries to employees on time and there were frequent flight cancellations which resulted in causing harassment to the public.
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Ajit Singh rules out Kingfisher closure
Kingfisher had earlier said that it would suspend international operations and operate about 120 daily flights with 20 planes as it seeks funding.
Mallya had earlier informed that the carrier's international operations would remain suspended till its status with IATA's inter airline transaction body is restored.
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Ajit Singh rules out Kingfisher closure
The airline, which made a loss of Rs 1,027 crore (Rs 10.27 billion) in 2010-11 and Rs 1,175 crore (Rs 11.75 billion) in the first three quarters of this financial year, has accumulated losses of Rs 6,000 crore (Rs 60 billion).
It has Rs 7,000 crore (Rs 70 billion) in debt on its books.
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Ajit Singh rules out Kingfisher closure
The airline owes over Rs 300 crore (Rs 3 billion) of tax deducted at source to the I-T department.
After the I-T department, the service tax department is also planning to drag Kingfisher to the court over non-payment of dues. The carrier has still not cleared its dues of Rs 76 crore (Rs 760 million).
As a result, their 40 bank accounts were frozen, as well as the IATA account.
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Ajit Singh rules out Kingfisher closure
A consortium of 18 banks, comprising 14 state-owned and four private banks had provided huge sums to the cash-strapped airline.
The loans given by the banks were reportedly turning to non-performing assets in the past weeks.
Bank chiefs have been quoted as saying that Kingfisher would need to arrange fresh equity of Rs 1,000-2,000 crore (Rs 10 - 12 billion) before seeking additional funds from the consortium of banks, led by the State Bank of India.
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Ajit Singh rules out Kingfisher closure
Finance Minister, Pranab Mukherjee had also announced that State Bank of India had expressed disinterest in lending further to the debt-trapped carrier. The airline had cleared all its tax and interest dues up to August 2011.
Activists like Aruna Roy and Deep Joshi had earlier written to the PM, asking him not to bail out the debt-trapped airline. A letter they sent to PM Singh said public funds should not be used to pay for the "mismanagement" of a "profligate private enterprise".
