Mallya denied commission on Rs 5,904-cr guarantees

 Kingfisher Airlines Chairman Vijay Mallya gave guarantees worth Rs 5,904 crore for the beleagured carrier’s loans and other liabilities in 2011-12, but has been denied commission for it because of lenders’ opposition.

Mallya had got a commission of Rs 51 crore for these guarantees in 2010-11, but the airline has said that payment of such commissions has been withdrawn after directions from the consortium of its lenders.

The 2011-12 commission is less compared to Rs 6,156 crore in 2010-11, while ; the guarantees provided by Kingfisher’s holding and associate companies rose from Rs 8,863 crore to Rs 8,926 crore in this period. As per the company’s annual report for 2011-12 sent to shareholders last evening ahead of the Annual General Meeting on September 26, the airline did not make any payments to Mallya during the fiscal, but its CEO Sanjay Agarwal’s remuneration almost doubled ,from Rs 2.12 crore to Rs 4.01 crore.

Kingfisher’s net loss more than doubled to Rs 2,328 crore in 2011-12, from Rs 1,027 crore in the previous year. Its total long-term borrowings stood at Rs 5,695 crore as on March 31, 2012, down from Rs 6,306 crore a year ago.

Besides, it had short-term borrowings of Rs 2,335 crore at the end of 2011-12, up from Rs 604 crore in 2010-11. For the loans, the airline has used as security all its movable assets, trademarks, ‘goodwill’ of the company, credit card and other receivables and a mortgage on Kingfisher House.

The airline said the the government’s proposal to allow FDI’s to pick up stake in domestic airlines could provide it a “widened access” to equity and bring in “strategic” partners.
Mallya said India's airline industry is currently exposed to one of the toughest operating environments and is expected to struggle with profitability pressures, with one of the highest prices for jet fuel across the world, rupee depreciation and high cost of borrowing.

"The Government of India is in the process to usher in fiscal measures and reforms that will make the operating environment more conducive for profitable business," he said.

Kingfisher said its "employee relations remained cordial". It is pertinent here that the airlines’ headcount fell by 1,651 people in 2011-12, or 22 per cent, compared  to 5,696 persons last fiscal and plans are afoot to “optimise” human resources. In recent months, there have been various reports about Kingfisher staff abstaining from work due to non-payment of salaries on time, thus affecting the airline's operations.

On the heels of a strike by its pilots demanding salaries, a section of engineers did not report for work yesterday protesting non-payment of March salaries.

The airlines listed out various measures that would be undertakn to maximise its profits and cut losses, Kingfisher said it would be "optimising human resources utilisation".
Other such measures include phased capacity re-induction, transitioning to a single brand offering, strengthening route structures and reconfiguring aircraft for productivity, revising sales and distribution reach.

Improving aircraft utilisation and schedule efficiency, focusing on driving revenue premium through yield management and a comprehensive review of costs across key functions are also proposed.