Kingfisher Suspended From IATA Clearing House

Kingfisher Airlines Ltd. (KAIR), the Indian carrier struggling with a cash shortage, had its account with the International Air Transport Association suspended after it failed to settle payments on time.

The carrier’s participation in the IATA Clearing House will be reinstated after it meets ICH requirements, the industry group said in an e-mail yesterday, without giving more information. The facility allows airlines to settle dues to other operators for carrying passengers and freight on their networks.

A freeze on the carrier’s bank accounts by India’s tax department caused the payment disruption, according to an e- mailed statement from Kingfisher yesterday. The airline is working to free its accounts “shortly” and it will resume payments to ICH once that is done. Passengers can continue to book flights through its website or travel agents, the statement said.

Kingfisher’s accounts were blocked by India’s tax authorities after it failed to pay dues.

Shares of the airline fell 6.7 percent, the most since Nov. 29, to 21.05 rupees in Mumbai yesterday. The airline, controlled by billionaire Vijay Mallya, earlier this week asked its pilots to continue working and pledged to pay salaries as soon as possible.

Kingfisher said Feb. 3 that an “internal system failure” had disrupted payment and triggered a suspension from ICH. The carrier said then it had paid all its dues and was expecting a reversal of the halt.

Yesterday’s IATA statement didn’t say whether the group had reversed the previous suspension. More than 450 airlines and associates use ICH, according to the group’s website.

To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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