Thursday, January 17, 2013

Breaking- Kingfisher approaches employees for assurance

Neelam Mathews
Jan 17, 2013

To ensure that Kingfisher continues its operations without being interrupted by demands and strikes for salaries it refuses to pay, AerospaceDiary learns that DGCA has asked the airliner to give it assurance that the staff will work without disruption before it gets its AOP.
KFA has been asked to give this assurance (you could call it an NOC from employees!)  by Jan 28 to the DGCA. If it is unable to do this, it cannot fly in the summer either.
A staffer AerospaceDiary spoke to says the mood is livid and it is highly unlikely employees will agree to anything until salaries are paid first. Hardly a surprise as half of them will lose their jobs anyway given the restructuring plan of KFA includes just seven planes to start with! But with KFA, one never really knows whats cooking..
However, this must be a tough one for Kingfisher, used to having people work without salaries!  


  1. Comments in Parts due to space restrictions-
    PART 1
    Dear Neelam/ Readers,

    I had been keenly following up few interesting issues of Kingfisher and with whatever little expertise I possess, which is nothing or miniscule compared to what the stalwarts at Kingfisher has, I would like to share some interesting facts….which could be your food for thought.

    To start Kingfisher as a Fresh with 5 Aircrafts immediately the kind of Fund infusion required is as follows :-

    Some basic Dynamics of Operating Cost for Kingfisher start –up on costs ( inclusive all )

     Airbus 320 per Operating Hour cost = Rs. 275,000 ( all up )
     Average Operations of @ 10hrs/day = 300hrs/ Month ( Avg stage length of 2hrs/aircraft )
     Total Operating Cost per aircraft X 45days = Rs.12,37,50,000 per Aircraft per month
     For 5 Aircrafts to Operate for 45 days Min which could over easily 25 Flights a Day total Fund required to be kept aside is Rs.61,87,50,000. This should be a fund infusion which needs to come and kept aside for PURE pure Ops only and forgotten
     At an average Load of 50% which Kingfisher would immediately attend on 15 days of Operations and at an average fare of Rs. 3500 ( that’s the Fare in which every Loyal customer of Kingfisher would abandon Indigo and move back ), on a 45 days cycle ( assuming they would have 0 Loads for first 15 days ), Kingfisher would earn 25flts per day X 30days X 165 seats X 50% X Rs.3500 = Rs.21,65,62,500

    Factually speaking it’s a straight loss of Rs.40 Crore in 45days Cycle, but the dynamics Changes in next 90 days cycle immediately.

    So what next .
     For 5 Aircraft Operations total Manpower as suggested by DGCA and required by KF should be retained and Paid upfront 3 Months salary without any discussion right across.
     The people who are given redundancy be provided a Two Months salary due and given a 12 Months window for settlement of older dues and Guarantee by PDC or ESCROW, which is a fair deal for them to move on life. Incidentally it’s the best bargain for the staff.
     If we see the Kingfisher Balance sheet the total manpower cost was pegged at 12% maximum, which is healthy looking at Magnamity and proportion of the Operations at what Kingfisher Operated. So out of the earned Rs.21,65,00,000 after 45 Days, if KF pays the salaries for the Current Month of Rs.2,60,00,000….that should cover easily 5 Aircrafts staff salary for the Months.
     Then for existing employees remaining 4 Montsh due be paid as 15 days additional every month as a cycle and in next 6-7 months the existing staff salaries can be regularized.
     The Gross loss over 90-100days in such pattern would come down to 40-50%, and as from Ops cost all other current payments including Fuel, ATC, GHA, Airports, banks etc are getting paid on Cash and Carry basis after the first 15days….cycle gets restored in next 100days easily.
     That leaves the previous Loss and big hole of Past, which needs to be serviced. But the stand of Banks in a running airline is very different from a defunct one and once Payments starts coming Banks would be ready to Listen even Restructure the Loan over next 24 Months, if not 36 months….as otherwise whats left is a bitter legal battle and a situation of bankruptcy…which is disastrous

    I don’t think with a regular Operations in this pattern Kingfisher should have any suitor problem after 6 Months of Operations and with the Staff by your side, a Lean and sensible Operations ( I hope my friends in kingfisher Understands a sensible Operations)…….not compete with others, but create a niche and compete with Kingfishers own Ghost of Past…………………….Kingfisher would survive and lease back to life easily.But the 45 days is crucial…….wherein all Stakeholders need to give a breathing space to the Airline and let it spring back and definitely willingness of Dr.Mallya and I'm sure Sanjay to look at this on same lines.

    Well the Fact remains is if Dr.Mallya is willing……………….all and everyone is ready to give a chance to KF, definitely the Travel fraternity, definitely the Travellers and if KF staff is sensible they should read my blog, think sensibly and long term and think radically and work. An winding up notice against KF wont work for simple reasons, as there are Govt.Banks involved here, Monetary funds, PSU’s ,Oil Company’s and Passneger monies involved….so if staff believes they would get their share before anyone…………what stops KF from putting a counter claim of Purposeful and organized unrest created by staff to ensure revenue loss by redundancy at work and non-performance Under the same the fight will go on and this would lead to nothing. It’s a Golden opportunity here and sensible Planning can make wonders. Hope Dr.Mallya, Siddhart, Sanjay and Mr.Nedungadi and DGCA is listening. Media has to support and assist also…….lets not forget and give a fair chance to an Airline….which could make the entire World sit up and recognize INDIAN Aviation. It’s a worthwhile try……that would be my little contribution to the cause called KINGFISHER AIRLINES."

    Managing Director
    AASHNA Airways and Tourism Pvt.Ltd.

    1. Any body can guess D. Mallya is not paying huge salaries to Sanjay and party, for not knowing these dynamics. Their dynamics and objectives/targets are altogether different.

      They succeeded in achieving their target, partially, and working their best, for the rest. What they need now is a financier who does n't ask for returns and not interested in control of the company.

      Curiously waiting to see......whats up.