Kingfisher airlines facing turbulence?

05/03/2012

Mat Coch writes:

Vijay Mallya's Kingfisher Airlines has had its bank accounts frozen by the Indian Service Tax Department due to defaults in tax payments.

It's understood the company has not paid some staff, including pilots, while what cash reserves it does have are spent on fuel to keep the company airborne.

"We are trying our very best to co-operate with the tax authorities and get our accounts unfrozen," said Prakash Mirpuri, vice-president of corporate communications.

"Despite Dr Mallya's promises, salaries have not come and it is a matter of concern," one pilot told India Today. It's suggested some pilots have begun refusing to fly as protest over the company's financial woes.

Mallya purchased the team from Spyker in 2007 and renamed it Force India the following year. Kingfisher has been sponsor of the team ever since, with industry monitor Formula Money suggesting the Indian airline invested $4m into the team in 2010.

The team was partially (42.5%) sold to Sahara India Pariwar in October, a deal worth $100m. The news came just days after the Force India team boss claimed he was "shocked to read a media report that I am selling the Force India Formula One team."

That money may go some way to covering any shortfall should Kingfisher's investment not materialise.