India's Kingfisher Airlines labour talks stall

Kingfisher, once India's second-largest airline, grounded since Monday, made no progress with employees in talks yesterday.

NEW DELHI // Kingfisher Airlines' efforts to resolve a labour dispute were dealt yet another blow yesterday after a group of employees said negotiations in Delhi had "ended in failure" because the airline did not commit to paying overdue salaries.

Kingfisher, once India's second-largest airline, is more than half a year behind on salary payments and has grounded its fleet since Monday after a protest by engineers over the weekend turned violent. Talks with employees in Mumbai on Wednesday ended in a stalemate.

"Employees demanded payment of long pending salary [seven months] prior to resuming operations. All employees expressed their keenness to resume work provided their dues are cleared expeditiously," the group of unidentified employees in Delhi said in a statement yesterday.

The shutdown has further dimmed the outlook for the airline controlled by liquor baron Vijay Mallya. Kingfisher, which has never turned a profit since its founding in 2005, is saddled with Dh5.1 billion in debt, owed mostly to government banks led by State Bank of India.

The lenders, which have refused to provide more funds without a capital injection into the carrier, planned to meet with the airline last night .

Indian banks rarely pull the plug on big companies, with state lenders perceived to be especially willing to help out companies in distress.

"We want a concrete plan from Kingfisher. We need to know how the capital will be infused and then we can see how banks can help," S Vishvanathan, deputy managing director of SBI, told Reuters ahead of the meeting between the airline and its lenders.

"I don't want people to start speculating. This is a routine meeting to keep ourselves updated," he said.

While the airline has said it is in talks with potential investors including foreign carriers, none has publicly expressed an interest in taking a stake in Kingfisher. India last month allowed foreign carriers to own up to 49 per cent in domestic players, a rule change that was sought by Kingfisher.

* Reuters