Kingfisher Airlines agrees to clear HPCL dues by July-end

New Delhi/Mumbai: Kingfisher Airlines has agreed to pay all its dues to Hindustan Petroleum Corp (HPCL) by July 31, after the government directed the state-run firm to stop supply of jet fuel to the airline.
The airline, owned by the UB Group, furnished a bank guarantee for Rs 300 crore against the dues, amounting to around Rs 484 crore, said a senior government official.
“If Kingfisher fails to pay the dues by the end of this month, HPCL is free to take legal action against the airline and evoke both the bank and corporate guarantees,” he said, requesting anonymity.
The UB group, which owns the carrier, had been getting fuel on credit from HPCL on a corporate guarantee of Rs 500 crore. The government instructed the fuel retailer to shift to a bank guarantee, as evoking a corporate guarantee is nearly impossible due to legal hassles. Kingfisher is facing mounting losses due to a no-holds-barred tariff war in the sector and an expensive deal to take over low-cost carrier Air Deccan. A Kingfisher spokesman also declined to give details of the agreement.
08/07/10 Rajeev Jayaswal & Dev Chatterjee/Economic Times

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Categories: Kingfisher Jul 2010