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Rediff.com  » Business » Mallya plays down MIAL's cash-and-carry decision

Mallya plays down MIAL's cash-and-carry decision

December 02, 2011 16:59 IST

Playing down Mumbai Airport's decision asking Kingfisher Airlines to operate under cash-and-carry mode from December 3, promoter Vijay Mallya on Friday said there was nothing "big" about it and the airline would fly full schedule.

As per MIAL's decision, Kingfisher Airlines will have to pay Rs 60 lakh (Rs 6 million) daily for operating flights, if it fails to clear about Rs 90-crore (Rs 900 million) of dues by December 3.

"Everybody has different credit terms for customers. Passengers in this country have to first pay for tickets before they travel. That's also cash and carry. When we advertise on newspaper or channel we also have to pay, that's also cash and carry".

"I don't understand what's this big thing about cash and carry. If we have pay on weekly or daily basis, people pay. And  Flights will operate...we will operate the full schedule," Mallya told reporters in New Delhi.

The development comes amid reports that even the state-run Airport Authority of India has threatened to put the airline -- which is sitting on a debt estimated at around Rs 12,000 crore (Rs 120 billion) -- on cash-and-carry mode.

The airline owes Rs 240 crore (Rs 2.4 billion) to the national airports operator.

Airlines usually pay monthly charges to the airport operators. But under the cash-n-carry mode, Kingfisher, which operates maximum flights from Mumbai and Delhi, will have to make daily payments.

Kingfisher is struggling to meet its working capital needs, and has sought relief from lenders. It owes close to Rs 7,060 crore (Rs 70.6 billion) to 14 banks, and they are currently assessing the viability of the airline.

Kingfisher reported a net loss of Rs 469 crore (Rs 4.69 billion) for the September quarter, though there was a 10.2 per cent rise in revenues at Rs 1,528 crore (Rs 15.28 billion).

The loss was on account of massive spike in aviation fuel prices, and inability to hike fares due to competition.

According to industry experts, the airlines are currently selling tickets at Rs 900 discount per seat.

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