Thursday, January 10, 2013

KFA - Jan 9- Panic Note?

Neelam Mathews
Jan 10, 2012

Letter sent out to Kingfisher employees immediately after employees of Kingfisher Airlines (KFA) threatened to file a winding up petition against the company on its inability to pay them salaries.

Our humble comments are in BLUE

Subject: Update

Dear Colleagues

I would like to wish you all a happy new year and take this opportunity of sharing important information with you.
It's  9 days since the year started!
1. Re-Start - we have submitted a detailed restart plan to the DGCA which is in two parts. The first part deals with a limited re-start utilising 7 aircraft ramping up to 21 aircraft in 4 months. The second part is a full scale rehabilitation of our Airline growing to 57 aircraft within 12 months of recapitalization. Both plans contain detailed information on key assumptions and funding requirements including payment of outstanding salaries to employees.
This plan has omitted giving NOCs required, we hear. So its not complete. 57 aircraft in one year? You have officially 39 on your inventory? Even if you return some leased aircraft  and lease more, wonder how good a deal you will get given your history of defaults. 
Funding? The banks refused recently to give you any more money. Ofcourse there is always the Diageo deal......all I guess the banks will say is, "Show me the money!"
2. Funding - The limited re-start plan which we target for the beginning of the 2013 summer schedule requires funding of approximately Rs. 650 crores which is committed to be provided by The UB Group and associates.
A break up would be nice to see. Wonder how many staff will be cut down as a result? As investors/lenders say: "Show me the money."
3. DGCA - we have met with the DGCA and are in the process of submitting additional data and no-objection letters from key vendors as required by them. The factual position is that the Civil Aviation Regulations provide for a time period of upto two years to renew an Airline's scheduled operating permit from the date of expiry. We are on safe ground here. We will make all necessary efforts to satisfy the DGCA in order to secure renewal of our AOP.
MIAL is said to have already given major slots of KFA away. Will be interesting to see how NOCs come in without paying the long line of vendors. You say you can start in two years and are "on safe ground". What does that mean? No salaries till then? 
4. Banks - we are meeting with our consortium of banks regularly and keeping them fully informed every step of the way. They have requested our urgent attention to certain overdues which we are addressing with them. The banks have been very co-operative and patient. There has been no discussion at all on recall of loans, enforcement of securities, reported in the media. On the contrary, the banks have expressed their keen desire to see Kingfisher fly again.
The banks will be keen to see KFA fly- you owe them a LOT! We hear they were not impressed at the latest meeting held in Bangalore and walked out. We could not confirm this. As for media bashing- what's new? Somebody said: "As you sow, so shall you reap." We were once very proud of the KFA brand and never hesitated to write about it then. So what could have changed, we ask? A bit of introspection required by KFA perhaps?

5. Prospective Investors - we have been in discussion with prospective strategic as well as financial investors for over a year. A large part of any investment decision hinged upon the Government's policy of FDI in Aviation by foreign Airlines. This new dispensation was announced on September 14, 2012 until which time discussions were stalled. The Aviation Industry in India is a seriously complex one including high costs resulting from excessive taxation and monopolies. Investors need to be convinced about the lon
g term prospects of their proposed investment in Kingfisher and this takes time. Please rest assured that we are in discussion with multiple investors and remain confident that we will secure a deal.
We have no doubt that you will ultimately secure a deal. The question is what about the moment? To say discussions were stalled because the government did not release the FDI policy as and when one company wished for it, would be being naive, particularly coming from an entrenched politician and businessman who knows the ropes.

6. Media - as you know, the media has continued their negative reporting on Kingfisher. I would urge each one of you to be particularly careful in any interaction you may have with them. Unfortunately, considerable management time is spent correcting or clarifying media reports than in transactional discussions.
Media? Ofcourse that dark ghost that encompasses the very being of the airline. This comment should go into the annals of PR history- how to communicate without communicating. When do most of us ever get a response from the company? Wouldn't it be better to give your point of view to a journalist rather than tweet all the time how messed up the media is? 

I appeal to each one of you to stand together in solid support of your organisation. We need to single mindedly focus on being back in the air and to win back the confidence of our loyal guests.
Read: Please, Please, do NOT go to court!!

Best Regards,

Vijay Mallya

Member of Parliament
Chairman and Managing Director
A UB Group Company

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