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Kingfisher staff salary: Lenders to release money

Last updated on: October 5, 2012 10:20 IST

Kingfisher staff salary: Lenders to release money

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Abhijit Lele in Mumbai

To enable ailing the Kingfisher Airlines to pay salaries to its employees, lenders to the airline have decided to release some funds from bank accounts that were earlier frozen by the Income Tax Department.

Recently, the department had decided to lift the freeze on these accounts.

About Rs 30 crore (Rs 300 million) would be released for the payment of salaries. Additional funds may also be released to meet operational expenses.

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Photographs: Reuters

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Senior public sector bank executives said the Income Tax Department's move to lift the freeze on some of the accounts had made their job easier.

At a meeting on Thursday, the lenders reviewed the situation.

"The concern of employees is the paramount issue.

"We have decided to release money for the payment of a month's salary and some essential operational expenses," said a bank executive.

On Thursday's meeting did not take any decision on recovery proceedings.

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Image: Vijay Mallya.
Photographs: Reuters

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"Our exposure (loan amount) is so huge that sale of assets (collateral) are not adequate to meet the obligations," said a public sector bank executive who attended the meeting.

The crisis in Kingfisher Airlines has worsened, as reconciliatory talks between the management and striking engineers and pilots over payment of salaries have failed, with employees rejecting the offer of part payment and vowing to continue their agitation.

Kingfisher Airlines has debt of about Rs 7,000 crore (Rs 70 billion).

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Photographs: Reuters

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Loans to the airline are classified as non-performing assets on the books of most banks including, State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank.

In November 2010, the airline's loans were restructured.

However, Kingfisher began to default on payments and loans to it turned non-performing assets for most lenders in the third and fourth quarters of 2011-12.

At a September 2 meeting with lenders in Bangalore, the airline's management did not present a satisfactory road map for tackling the crisis and beginning repayments.

The company, however, repeated its demand for immediate funding assistance.


Image: A cyclist rides past a perimeter wall at Mumbai's domestic airport, behind which a decommissioned Kingfisher Airlines aircraft is parked.
Photographs: Vivek Prakash/Reuters

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