Kingfisher Airlines continues to default on payment of dues

New Delhi/Mumbai: India’s top ranked carrier by passengers flown in the March quarter, Kingfisher Airlines Ltd, continues to default on payments.
In the latest instance, Indian Oil Corp. Ltd (IOC) has encashed bank guarantees of around Rs65 crore provided by the airline, after a cheque for some Rs50 crore issued to the oil firm by the airline bounced last week, people familiar with the development said. It wasn’t immediately clear if the guarantee had been encashed in full or in part.
A Kingfisher spokesman declined to comment on the matter, saying it does not “discuss its relationships with suppliers in the public domain”. A spokesperson for IOC also declined comment. “We don’t comment on the commercial dealing with our clients,” the spokesperson said.
This is the first time that bank guarantees given by the airline, founded by billionaire businessman and liquor tycoon Vijay Mallya, have been encashed.
In November, state-run Airports Authority of India (AAI) which runs most of the country’s airports, had threatened to encash bank guarantees of Rs100 crore after Kingfisher fell behind on a payment of at least Rs256 crore.
After cheques given to the authority bounced last fortnight, the carrier transferred some Rs77 crore electronically to AAI. After this payment, said an AAI board member who did not want to be named, Kingfisher’s dues for now are within the bank guarantee furnished by the carrier.
Dues to three state-run oil companies totalling to at least Rs1,000 crore, however, still remain to be paid, forcing IOC’s hand.
04/05/09 Tarun Shukla, Utpal Bhaskar and P.R. Sanjai/Livemint

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Categories: Kingfisher May 2009