Kingfisher crisis likely to be resolved next week: Vijay Mallya

Hoping to resolve the crisis facing Kingfisher Airlines early next week, Vijay Mallya on Monday said he has organised funds to pay "seriously overdue salaries" to the employees.

Mallya gave no details about the funding but said the airline promoters have converted their loans for an additional five per cent equity last week.

In a letter to the employees, Mallya also lashed out at "Indian and 'paid' media" for their reports on the cash-strapped carrier, saying they would do whatever it takes to achieve their "sensationalist objectives".

"The Indian media and the 'paid' media that even the Prime Minister referred to are unscrupulous and they will do whatever it takes, part fact or fiction, part true or untrue to achieve their sensationalist objectives," he said while referring to the "media frenzy" on the recent developments in the airlines.

"I have organised funding so that we can pay your seriously overdue salaries which is a source of great personal sorrow for me. We are currently handicapped as our bank accounts are frozen by the tax authorities," Mallya said.

"I have been working tirelessly to urgently resolve this issue through negotiation and I hope that these efforts will be successful early next week. We fully intend to pay our tax dues as much as we commit to paying your salaries," he said.

According to latest figures, Kingfisher has suffered a loss of Rs1,027 crore in 2010-11 and has a debt of Rs7,057.08 crore. Struggling with fewer flights, unpaid salaries and outstanding dues to oil companies, the ailing carrier has posted a Rs444 crore loss for the third quarter.

Mallya said that Kingfisher promoters, the UB Group and its associates have converted its loans for an additional five per cent equity in the airlines last week.

"This is the maximum permitted under law in any one financial year but clearly demonstrates the faith that I have in all of you and in our company," he said.

Mallya acknowledged that a large number of employees had left and many were about to quit the airline.

"Whilst many may have left our family and many may be in the process of leaving, our family may have become smaller for now," he said.

Noting that government policies could "make or break any industry", he said, "so far it has been downhill for Civil Aviation except for one airline that defies the odds and claims to be profitable however unlikely that may be."

He said he saw "light at the end of a long dark tunnel" as the government has allowed direct import of aviation turbine fuel, saying it would help in saving about 15% of the airline's current fuel costs.

"I am hoping that the next positive move would be allowing foreign airlines to invest upto 49% of the equity in Indian carriers. This has already been widely announced by the Minister of Civil Aviation and according to reports, has been decided upon at an Empowered Group of Ministers' meeting," Mallya said.

He said the Kingfisher family would grow "with those who have the pride in their hearts of having stood by our company through ups and downs, sometimes with great personal sacrifice. That is the true test of loyalty dedication and commitment".

Mallya also hoped that the employees would "smile happily when this turbulence is over".

According to available data with bourses, the overseas investors are dumping Kingfisher Airlines as their total holdings have come down to 0.5% in the 2011 December quarter from over two per cent in the previous three months.