Tuesday, November 15, 2011

To write epitaph of Kingfisher is not fair, says Vijay Mallya

Neelam Mathews
Nov 15, 2011 

Apologizing for being late for the press conference –something that has become his trademark - Chairman Vijay Mallya asked the media to “indulge” him, even as he clarified “facts” on reportage of the possible closing down of Kingfisher Airlines. “To write an epitaph of Kingfisher is not fair,” he lamented.

Even as Jet Airways has increased its yields following cancellation of flights by Kingfisher Airlines that is said to have around 30 planes on ground, Mallya  acknowledged he had cut loss making routes. “We cannot afford to fly routes that are commercially loss making.”

“We suspended flights with a responsibility, my friends,” he said. He added KFA was continuing to operate flights where the airline had no competition.

Mallya said unlike another airline that had threatened to lay off 1000 staff,  he hasn’t laid off any staff….”We value our employees, they are our most important assets….We want to protect them ……not resort to large scale layoffs..” An analyst says: “KFA would like to retain staff- they’ve lost enough already through poaching by other carriers.”

“It behoves us to look at reducing interest costs….. one such proposal is we have the equivalent of Rs 1000 crores with lessors towards deposits on aircraft maintainance- we are in dialogue with banks to open letters of credit which are lot cheaper so we can recover this in cash and repay loans. Initiatives such as this will save us considerable amount of interest.”

An upset CEO Sanjay Aggarwal said: “It was very disheartening to read what we read….. without any respect for operating environment  …..’end of good times’…..(this is despite) all the effort (our) 7000 employees put in everyday….. raising service standards that KFA created …. ….. the airline is doing everything possible to ensure its future….” (some would say we have a free press!)

He added: “In hindsight - yes—we should have handled cancellation of flights better…we accommodated customers on other flights…we gave them money back…for that one decision to be penalized was going too far…..”

Subrata Roy Sahara  told NDTV he was a relieved man to have exited the aviation business on time. “When there is no study of demand and supply, and when there is a mismatch, these things are bound to happen in aviation.”

“Everybody jumps into aviation with a lot of expectations….the moment it (airlines came in) expanded, I knew it……,” he added.

Meanwhile, KFA says it has applied to the ministry of commerce for direct import of fuel. Mallya had threatened to do this in the past too. However, no action was taken. Given the logistics, this will prove to be a tough act to manage.

1 comment:

  1. Airline at the bottom of the pyramid must perish. It has happened all the time in the past.

    Now it is the turn of Kingfisher. An airline consistently funding it's negative cash flows from long term debt can never survive.