Tuesday, 23 October 2012

Kingfisher Airlines offers to pay three months' salaries; employees to respond by October 26




For the first time since Kingfisher Airlines was grounded, the management has made an offer that at least some employees are willing to consider. It has said it will pay three months' salary, in a staggered manner before Diwali, and the offer has reportedly split the protesting staff of the airline, some of whom, mostly pilots, say that its fair and that they are ready to come back to work.

But most of the engineers - which was the section that went on strike first on September 30, forcing the airline to ground its already depleted fleet - are reportedly still holding out demanding at least four months' salary immediately. The management has asked the employees to respond to its offer by Friday, October 26.

Kingfisher's 4000 employees haven't been paid in seven months, triggering the latest strike which has snowballed into a situation that has put a huge question mark on the airline's fate. Civil Aviation Minister Ajit Singh seemed to sound the death knell when he told NDTV yesterday, "It is unrealistic to expect Kingfisher to fly again." The minister also said, "Kingfisher has taken its employees for a ride." (Watch: Ajit Singh on the crisis)

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But the airline, which had its licence suspended on Saturday, hopes to fly again. The licence was suspended as the airline failed to address aviation regulator DGCA's concerns about its operations; the move forced the debt-laden carrier to stop taking bookings. Sources say the airline is prepping the revival plan that the DGCA had sought and aims at submitting it before November 6. also says it expects the offer of three months' salary, made at a meeting attended by both pilots and engineers yesterday, to get its protesting employees back at work. "We have talked about there being three (months') salaries to be paid before Diwali. We will know the logistics, but the intention is everyone should be back at work in a day or two," Kingfisher CEO Sanjay Agarwal told reporters. "We expect employees will be at work by October 26," he said. Kingfisher has not shared details on how it plans to fund the salary pay-out proposed.  (Kingfisher crisis: Top 10 Developments)

While Mr Agarwal seemed confident that most employees will return to work, a section of the workers remain equally adamant, especially engineers, who are critical in putting planes in the air. "So many times in the previous times, you haven't kept by your word. How do we trust that you will give our dues? Give us four months salaries, that was our demand, we will come and resume the work," said SC Mishra, the spokesperson for the engineers in Delhi. "One employee's wife has already committed suicide due to sheer pressure. How many dead bodies do you want to see?" he said.

But there are also those like Raju Kumar, a Kingfisher engineer who attended the meeting, and said, "We were expecting the management to give us a good offer...We still think that Vijay Mallya will come to us with something."

What could create a problem for the employees on strike is that there seems to be a split between the pilots and the rest of the staff. Sources within Kingfisher told NDTV that at least 80 per cent employees are still unhappy with the management's offer.

Controlled by Vijay Mallya - the self-styled "King of Good Times" - Kingfisher's fleet has been grounded since the start of the month when a staff protest turned violent. The airline, which has never made a profit since being founded in 2004 and reeling under $1.4 billion of debt, will have its licence reinstated if it provides a plan that satisfies the Directorate General of Civil Aviation.

The company's steep decline has underlined the problems of operating in India's airline sector, where players grappling with rising fuel costs face aggressive pricing caused by overcapacity.

The suspension signalled the regulator's lack of patience with Kingfisher after months of cancelled flights and staff walkouts, and marked a rare tough stance by the government against a high-profile corporate. "The actual position is not changed because of this order," Kingfisher said in a statement. "We have, in any case, always maintained that once the issues with the employees are resolved, we will first present our resumption plan to DGCA for review, before resuming operations".

Mr Mallya, a liquor baron who owns a Formula 1 motor-racing team, is famous for lavish parties at his $16 million beachside villa in Goa and also his company's annual swimsuit calendar.

The licence suspension, until further notice, was announced by Arun Mishra, director general at the DGCA.The move had been widely expected after Kingfisher failed to respond properly to queries from the regulator regarding its ability to provide a "safe, efficient and reliable service".

"The suspension of Kingfisher's licence is unfortunate but not unexpected," Amber Dubey, director, aerospace and defence at KPMG India, said in a statement. "Kingfisher's ability to bounce back from this situation appears challenging."

Kingfisher's troubles will likely help rivals such as Indigo and SpiceJet  by lowering capacity on key routes. The airline had said on Friday it expected to begin flying again on November 6 if the government approved its plan to resume operations. The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion.





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