Kingfisher Airlines continues to hurtle into turbulence as protests by a section of pilots and the freezing of the company's bank accounts due to a default in service tax payments is threatening to throw the carrier's schedule out of gear.
Some pilots had recently refused to operate flights in protest against non-payment of salaries for the last three months despite several promises made by the management.
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Though the airline has money to meet its expenses and pay salary, it is unable to do so because over 40 of its bank accounts have been frozen by the tax authorities due to non-payment of tax deducted at source (TDS) and service tax dues.
Last Friday, the Services Tax authorities froze several of Kingfisher's accounts to add to its problems.
The worry of the pilots is genuine as their financial condition has deteriorated severely. Some of them fear that they may not get their dues at all, in case, of lingering financial woes as overall operating expenses of the airline are huge and most of the cash-in-hand is being spent on jet fuel to keep the planes flying.
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The lower-grade employees are facing even greater hardships as they have run out of cash.
To press for their cause, some pilots had refused to accept flights. Though the airline has enough pilots to operate the present curtailed schedule, any escalation could snowball into a major crisis.
"We need money to meet daily expenses. EMIs need to be paid. Despite Dr Mallya's promises, salaries have not come and it is a matter of concern," a pilot said on condition of anonymity. "Chances to join other airlines are also getting slim," he added.
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The Kingfisher management on Saturday met with some pilots with a section of the media reporting that pilots have been threatened with a shutdown, in case, they desist from work.
However, Kingfisher has denied any such theory. Some pilots said that the matter was twisted. "The CEO only said that stopping of work could lead to the closure of the airline," a pilot said.
"Sanjay Aggarwal (Kingfisher Airlines CEO) met with a group of pilots to appeal to them to continue their duties. At no time was there any suggestion that Kingfisher Airlines would shut down," said Prakash Mirpuri, vice-president (corporate communications) Kingfisher Airlines.
"We are trying our very best to co-operate with the tax authorities and get our accounts unfrozen at the earliest so that normalcy could be restored, employee salaries paid and further aircraft recoveries started," Mirpuri said adding that flights are operating as per schedule.
Over 40 of KFA bank accounts have been frozen by tax authorities due to non-payment of tax deducted at source and service tax dues Kingfisher owes the service tax department Rs 40 crore.
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In November, the airline had committed to clear the outstanding dues by March 31 through installments, but as its cash flow has diminished drastically due to flight cuts and refusal of banks to lend towards working capital, the airline has failed to keep its payment schedule prompting the service tax department to attach the accounts.
All money from ticket sales flows into these frozen accounts, which Kingfisher cannot operate. Kingfisher was required to pay Rs 130 crore to the Income Tax Department towards pending dues.
Last week, Vijay Mallya in a letter to employees had stated: "I have organised funding so that we can pay your seriously overdue salaries, which is a source of great personal sorrow for me. We are currently handicapped as our bank accounts are frozen by the tax authorities. I have been working tirelessly to urgently resolve this issue through negotiation and I hope that these efforts will be successful early next week. We fully intend to pay our tax dues as much as we commit to paying your salaries."
Recently, the State Bank of India announced a loan for the beleaguered airline, which was met with resistance from its unions who had said that carrier had repeatedly defaulted on payment of loans.
Courtesy: Mail Today