Airlines delay payments to oil companies for fuel purchase

Mumbai: Indian airline companies are delaying payments to oil companies for fuel purchase as a soaring crude and an intense fight for passengers sap cash flows needed for core operations.
Top oil company officials told ET that Kingfisher Airlines, run by Vijay Mallya, and Naresh Goyal-promoted Jet Airways are among those running late on payments for aviation turbine fuel (ATF) purchase. Carriers such as Indigo, SpiceJet, Go Air also face similar problems but the extent of arrears is not large.
“Airline companies are delaying payments in spite of seeking a very comfortable line of credit and huge discounts. We have to service them because of competition among the PSU oil companies to sell ATF,” said the executive director, aviation business, of a state-owned oil company.
ATF constitutes 40% of the operational cost of an airline and its prices have soared in recent months in line with surging crude. Airlines have different arrangements in place for making such payments. Some provide bank guarantees while others have line of credits. These typically last for about a week.
10/06/08 Piyush Pandey/Economic Times

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Categories: Indian Aviation- In General Jun 2008