IOC invokes Rs 50cr bank guarantee of Kingfisher

New Delhi: IndianOil Corporation (IOC) has invoked the bank guarantee of Kingfisher Airlines after a cheque issued by Vijay Mallya's carrier to pay for jet fuel bounced. This is the first time an oil company has encashed a carrier's bank guarantee to signal the end of tolerance over their dues, even as the aviation industry continues to reel under losses despite fuel prices having dropped by almost half their August 2008 prices.
Industry sources said IOC has encashed a bank guarantee of about Rs 50 crore after a Kingfisher cheque bounced in April. Kingfisher reportedly owes around Rs 700 crore to the three state fuellers — IOC, HPCL and BPCL. While IOC accounts for about Rs 70-80 crore of this due, HPCL has an exposure of over Rs 500 crore.
Kingfisher spokesperson Prakash Mirpuri said: "It is not Kingfisher's policy to discuss its relationships with suppliers in the public domain. Kingfisher is operating its full schedule of flights daily and maintaining its award winning service quality." Indian carriers are facing harrowing times financially due to a combination of factors like high oil prices last year and a weakened travel demand and now swine flu.
05/05/09 Sanjay Dutta & Saurabh Sinha/Times of India

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Categories: Kingfisher May 2009