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Unable To Meet Payroll Obligations Kingfisher Airlines Employees Remain On Strike

By Mike Mitchell

October 3, 2012 - Striking engineers and pilots at Kingfisher Airlines met today with management of the India based air carrier to discuss employee back pay of seven months. The airline informed their workers it would only pay them one month's salary and would pay the remaining six months when the company gets recapitalized.  

The offer by Kingfisher management was rejected and the employees stated they will continue their strike. The carrier has suspended all operation as of Monday.  

Captain Vikrant Patkar, a pilot and a representative of striking Kingfisher engineers and pilots said "Our strike will continue as management has failed to give any commitment on payment of salary. There is no money and they can't give any commitment”. 


Patkar further stated the company offered to pay its employees a one month pay settlement as long as employees went back to work and that the employees would not receive the payment until about 15 days from the acceptance of managements offer. 

Kingfisher Airlines has been facing financial issues for many years. Back in December 2011, Kingfisher Airlines held the second largest share in India's domestic air travel market. However due to a severe financial crisis faced by the airline at the beginning of 2012, it now has the lowest market share.  

Ever since the airline began operations in 2005, it has been reporting losses. After acquiring Air Deccan, Kingfisher suffered a loss of over $189 million for three consecutive years. By early 2012, the airline accumulated losses of over $1.32 billion with half of its fleet grounded and its employees out on strike as a result of not getting paid.  

Kingfisher's position as top Indian airlines on the basis of market share had slipped to 5 from 2 because of the crisis. Back in December 2011, Kingfisher bank accounts had been frozen for one day as a result of failing to forwarded its employees income taxes to government since March 2009.



By mid February of this year, Kingfisher Airlines started to sink into a fresh crisis. Several flights were cancelled and aircraft were grounded. The cash-strapped airline claimed that the disruptions would continue for four days due to unexpected events including bird strikes which rendered aircraft out of service.  The airline shut down most of its international short-haul operations and also temporarily closed bookings. Out of the 64 aircraft, only 22 were known to be operational by February 20. With this, Kingfisher's market share dropped to 11.3%.  

The cancellation of the flights was accompanied by a 13.5% drop in stock value. The CEO of the airlines, Sanjay Agarwal was summoned by the Directorate General of Civil Aviation and the Chairman CBDT to explain the disruptions of the operations. In March 2012, the airline was suspended by the International Air Transport Association from using its inter-airline fund clearing system, the suspension meant the airline would have to deal directly with other airlines when sharing revenue on services.  

Due to the ongoing financial crisis, an Airbus A330-200 aircraft was impounded at London Heathrow Airport in the United Kingdom under Court Orders due to unpaid fees to aircraft leasing companies and RBS. In June 2012, GVK, India's second-largest airport operator launched legal proceedings against Kingfisher Airlines, as a series of checks issued by the airline, bounced.

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