Oct. 2 (Bloomberg) -- Kingfisher Airlines Ltd., the money-losing Indian carrier controlled by billionaire Vijay Mallya, extended a shutdown through at least Oct. 4 after locking out striking workers it said were intimidating other employees.
“Despite the fact that a vast majority of the staff are willing to cooperate and support the company in these turbulent times, they are not able to,” the Bangalore-based carrier said in a statement on its website after the lockout began yesterday. The company will try to engage with “recalcitrant employees to persuade them to cease and desist from intimidating and threatening” non-striking staff, it said.
The dispute prompted by unpaid wages may hinder the airline’s efforts to find new investors after cash shortages forced flight cuts, salary delays and service disruptions. Management will also meet the Director General of Civil Aviation today, a national holiday, after Aviation Minister Ajit Singh said the carrier could be closed if it can’t allay safety concerns.
“The current set of problems will make it more challenging for Kingfisher to attract investments,” said Sudip Bandyopadhyay, Mumbai-based managing director of Destimoney Securities Pvt. “Even without this strike, they would find it difficult to get funds as there are more attractive options.”
Some Kingfisher employees have stayed away for two weeks, Prakash Mirpuri, an airline spokesman, said in a text message yesterday. The striking employees include pilots and engineers, according to the Economic Times and Business Standard newspapers. Some workers on Sept. 30 refused to deploy aerobridges in Mumbai, leaving passengers stranded inside aircraft, the Mint newspaper reported, citing an unidentified person. Mirpuri didn’t answer phone calls or reply to text messages seeking further comment.
The carrier, which has posted five straight annual losses, fell by its daily limit of 5 percent in Mumbai trading yesterday to 15.35 rupees, the most since Sept. 20. The stock has declined 27 percent this year, after plunging 68 percent in 2011.
Kingfisher, named after Mallya’s flagship beer brand, has slumped to sixth from second in terms of domestic market share after paring services and losing passengers. It had a 3.2 percent share in August, the lowest among six carriers.
The airline operates 15 of its 40 planes and will ramp up operations after recapitalization, Mallya said Sept. 26, without specifying a timeframe. The company is in discussions with overseas carriers about a possible stake sale, he said. The government ended a ban on such sales last month. Kingfisher has been seeking investment since at least November.
The carrier’s founders have contributed 11.5 billion rupees ($219 million) since April 1, Mallya told shareholders on Sept. 26. The billionaire is also in talks to sell a stake in United Spirits Ltd., the largest distiller in India, to Diageo Plc as he seeks cash.
In July, Kingfisher scrapped about 40 flights after some employees refused to work because they weren’t paid. The services were restored later. The carrier also delayed payments to banks, airports, tax authorities and fuel suppliers.
The airline’s planes will need to pass safety checks before services can resume, Minister Singh said yesterday. Kingfisher said in its statement yesterday that it has enough staff to safely operate its current schedule.
“If there is no certificate for airworthiness from engineers who are qualified to do that, they won’t be allowed to fly,” Singh said. “There were strikes many times earlier. This is the first time the safety issue has come up.”
Still, the government may not force Kingfisher to shut down as that’s not in the interests of banks that have lent it money, a civil aviation ministry official said yesterday in New Delhi, asking not be identified.
The airline has pledged its brand, office furniture and other assets against 64 billion rupees of debt. It is also in talks with banks and lessors after they invoked 8.4 billion rupees of financial guarantees its parent provided.
The carrier may lose its permit if its fleet falls below five planes, Aviation Minister Singh said Sept. 28. Lessors have taken back 32 planes from the airline, the Economic Times newspaper reported in June.
Kingfisher has asked banks for additional working capital loans and for more time to pay existing loans, two bankers familiar with the matter said last week. The carrier needs a capital infusion of $600 million to survive, industry consultant CAPA Centre for Aviation said in August.
Kingfisher has a long-term debt to total capital ratio of 162 percent, according to data compiled by Bloomberg. Jet Airways (India) Ltd.’s ratio is 58 percent, while discount carrier SpiceJet Ltd.’s is at 76 percent.
Industrywide losses by India’s airlines exceeded $2 billion in the year ended March, according to CAPA. That may narrow to $1.4 billion in the current fiscal year, CAPA said.
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