Kingfisher Financial Crisis puts Oneworld on hold

Debt Problems Puts Brakes on Oneworld Membership

Kingfisher Airlines was scheduled to join oneworld alliance on Friday, February 10th, but amidst financial problems, entry into the alliance has been put on hold.  This news comes as oneworld alliance carrier Malév ceased operations, stranding passengers away from home and leaving others to make new travel arrangements.

We discuss the stoppage of Malév in Oneworld Carriers Assist Malév Passengers and in Malév Ceases Operations.

In a statement released by oneworld, the oneworld CEO Bruce Ashby said, “These are turbulent times for the airline industry in India and many other parts of the world.  We have been working closely with Kingfisher Airlines over the past months and it has become increasingly clear recently that the airline needs more time to resolve the financial issues it is confronting before it can be welcomed into oneworld.”  Ashby continues, “We wish it well during this process and will work with Kingfisher Airlines with the aim of setting a new joining date once it is through this current period of turbulence.”

In the same statement, Kingfisher Airlines Chairman, Vijay Mallya, added, “In light of the many priorities centred around Kingfisher Airlines’ recapitalisation efforts, we felt it prudent to defer our entry into the alliance for a little while. This will allow us the opportunity to focus on the issues at hand and we look forward to being part of the oneworld alliance very shortly.”

Kingfisher Suspended from IATA

 

Yesterday, we learned Kingfisher Airlines was suspended from IATA, short for International Air Transport Association, as a result of alleged non-payment.  IATA operates a clearing house for airline tickets similar to banks clearing cheques through a clearing house for credits or debits.  The IATA clearing house processes payments for flight coupons on airline tickets – as an example, Kingfisher can issue a ticket for travel on Kingfisher and British Airways; when British Airways submits the flight coupon through the clearing house, British Airways is to receive credit (paid) for the value of the flight coupon while Kingfisher has their account debited.

Kingfisher made a statement claiming the suspension was the result of a technical glitch and that the carrier was paid in full, with no money owed, to the IATA clearing house.

Regardless of which account is true, Kingfisher is facing problems with debt and has not been able to pay vendors and bank loans on-time.   Looking at financial statement, the airline has not been able to make a profit since its inception.

The carrier has been losing employees, being unable to make payroll on-time for nearly four consecutive months (1).

If you have tickets on Kingfisher, it is suggested you watch your reservation for flight changes or irregularities in this period of turbulence among the Indian airline industry.

At this moment, Kingfisher is attempting to restructure its debt with hopes to resume full operations by summer, but the carrier is facing resistance from the government and lenders.

(1) Hindu Business Line

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One Response

02.04.12

I am in India on business and our company policy is to avoid Kingfisher. I believe Kingfisher is on the “hot list” or airlines not to use for our travel insurance, in case they become insolvent.

From what I see here and read in local papers, it is hard to say how much longer they might be around.

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