Will not close down Kingfisher due to losses: Ajit Singh

Civil Aviation Minister Ajit Singh Wednesday discounted the possibility of Kingfisher Airlines closing down due to its inability to raise fresh funds and mitigate losses.

“You can’t close down a company just because they are making losses or banks are not giving them money,” Singh told reporters here.

“As long as passenger safety is not jeopardised, as long as they keep their schedule, why should we close down any industry.”

Singh further said that closing down of any airline would impact passengers and that the regulator was studying the new schedule submitted by the airline.

The minister’s comment came ahead of a crucial meeting of lenders, a consortium of public and private banks, to decide on recapitalisation of the company as well as its debt recast measures.

Also, this is the second such instance when a union minister has ruled out closing down the airline.

Corporate Affairs Minister M. Veerappa Moily had said earlier that the airline has to be saved and that the government would go up to the last point.

The sector regulator is said to be studying the new schedule submitted by the airline which has been curtailing its flights since Feb 18 as cash crunch, exodus of pilots and operational troubles hit its operations leading to cancellation of hundreds of daily services.

The Directorate General of Civil Aviation (DGCA) is inquiring into the large-scale cancellations and the fact that the airline failed to inform it of its revised flight schedules. The DGCA is also said to be screening the airlines’ operational aircraft to find their airworthiness and if financial constraints have in any way compromised passenger safety.

Currently, the airline is operating about 170 daily flights — down from its original schedule of 240 operations.

The airlines’ latest trouble started Feb 18 when its employees in Kolkata went on a flash strike. The carrier, on the other hand, blames the seizure of its bank accounts by the Income Tax department as the main reason for flight plan curtailment.

Kingfisher has a debt of Rs.7,057.08 crore. The company’s net loss widened to Rs.444.26 crore for the quarter ended Dec 31, 2011, from Rs.253.69 crore in the October-December quarter in the last fiscal.

The company’s scrip at the Bombay Stock Exchange (BSE) rose by 3.68 percent to hit an intra-day high of Rs.25.3 and closed at Rs.24.65, 1.02 percent up from the previous day’s close.