No fuel on credit for Kingfisher Airlines, only ‘cash & carry’

Bangalore: Kingfisher Airlines will now have to pay upfront to buy aviation turbine fuel from oil companies to operate its regular scheduled flights.
This follows the oil companies insisting on the new payment method, ‘cash & carry’ for the airline as it has failed to clear its dues.
An airline official told Business Line that even though some of the oil companies had threatened to stop supply of aviation turbine fuel to Kingfisher Airlines from today onwards, its operations remain unaffected and that it was sticking to all its schedules.
While oil industry sources maintained that the airline owes over Rs 1,000 crore in dues to the oil companies, the official who did not wish to be named, said it was only half of that amount. ATF constitutes about 50 per cent of the total operational cost of an airline.
The official said that the airline will abide by the directives of the Government with regard to settling of ATF dues with the oil companies. He said the airline was currently holding talks with Government officials on the issue of dues to oil companies.
Sources in the oil industry said that with Kingfisher Airlines agreeing to the ‘cash & carry’ mode, oil marketing companies will not carry out any immediate action against the airline, though they will continue to seek ways to get the dues from the airline.
The official from the airline pointed out that they have received a letter from the oil marketing companies (OMCs) asking for payment of interest on outstanding dues and bank guarantee. Sources in the oil industry said that Jet Airways, Kingfisher Airlines and the National Aviation Company of India owe nearly Rs 4,000 crore in dues to the OMCs for supply of aviation turbine fuel.
30/01/09 Business Line

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Categories: Kingfisher Jan 2009