Beleaguered Kingfisher Airlines today sought government help for a bailout on a day when its shares crashed to a record low amid continuing debt fears, as it cancelled more flights for the fifth straight day with 40 flights being withdrawn.
With his cash-strapped airline hitting a air pocket, its owner Vijay Mallya made a urgent request to finance minister Pranab Mukherjee and civil aviation minister Vayalar Ravi to help his carrier in infusion of funds through banks at low interest rates, besides other concessions in line with what Air India was getting, sources said on Friday.
The stocks of the airline plunged to an all-time low to 19.1 % in early trading on the Bombay Stock Exchange to a record low before recovering to 9.45 %.
Hundreds of passengers were inconvenienced after the private airline went on a cancellation spree amid reports of travel agents not taking bookings. With today's cancellation of 40 flights, at least 160 scheduled flights were not operated since Monday.
Observing that Kingfisher was "facing a problem", Ravi said Mallya had met him and explained the problem.
"I will also talk to the finance minister ... (so that) some assistance from the lead banks is granted. ... Closing down of flights affects the travelling public.
"Whether it is private or public sector is immaterial. It is an Indian carrier. He could not get financial assistance, so he talked to me," Ravi told reporters here.
However, there was no official word immediately on whether any step was being taken on Mallya's request, which he made earlier this week.
Ravi's comments drew sharp criticism from BJP leader and former finance minister Yashwant Sinha, who said there was "no case for a government bailout for Kingfisher. We cannot support such a step."
Congress spokesperson Manish Tewari said it remains to be seen whether in a market economy the government will walk the extra mile to bail out a private company or should allow the shake-out to take place and the fittest to survive".
Replying to questions on the Kingfisher issue, Tewari said, "Ask the civil aviation minister because there is a fundamental issue involved here. But in what context, what circumstances (is government bailout being thought of), he can better explain." Thousands of passengers across the country cancelled Kingfisher flight tickets to travel by other airlines, though after paying 20-40 % higher at the last moment.The airline, which had earlier said it would restore its flights after October 19, has now indicated that it would take a few more weeks to normalise the flight schedule, that would go into the peak winter season air traffic. Apart from taking aircraft off flights to reconfigure and install business class seats in them, airline CEO Sanjay Agarwal told PTI, "We decided to reduce frequency in some of the routes where we had multiple flights like Delhi-Mumbai or low passenger load like Nanded-Mysore. This is part of route rationalisation to improve profitability and revenue productivity of the flights". Chaos over flights cancellation
Asked whether they had responded to the show-cause notice issued by the Directorate General of Civil Aviation (DGCA), Agarwal said, "We are in close touch with them. We are explaining to them that these cancellations are temporary in nature. We are keeping them informed."
DGCA has issued the notice under Rule 140(A) of the Aircraft Rules, 1937, asking Kingfisher why it had not taken the regulator's prior approval to curtail its flight schedules as required by this rule. It has also sought to know whether the airline had taken any step to facilitate the passengers inconvenienced by the cancellations.
Meanwhile, oil PSUs -- HPCL, IOC and BPCL -- have denied extending Kingfisher the credit line and asked it to pay for lifting jet fuel on a daily basis. The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore.