Kingfisher’s ploy to grab policymakers’ attention by cancelling flights almost worked this time, but the government did a quick about-turn when it sparked national outrage and angry protests
When is the last time in India’s known history that the prime minister and the aviation minister (who, in turn, said he would talk to the finance minister) rushed to help a private sector company, even before it had sought a bailout? That is exactly what happened on 11th November when Vijay Mallya’s Kingfisher Airlines grabbed headlines by cancelling dozens of flights and causing a national embarrassment. Obviously, Mr Mallya’s advisors forgot that such headline-grabbing action failed to work even in 2008 when Jet Airways threatened to sack nearly 1,000 employees even as they were on their way to work. Kingfisher’s ploy to grab policymakers’ attention by cancelling flights almost worked this time, but the government did a quick about-turn when it sparked national outrage and angry protests. Interestingly, Mr Mallya held a press conference to claim that he hadn’t even asked for a bailout involving taxpayers’ money. All he needed was working capital from banks. What was unsaid was about the collateral he was willing to offer. Did Mr Mallya believe that the world was unaware that he was his struggling to pay his ground-handling agency and staff salaries? Or that he was leveraged to the hilt; that he has pledged almost his entire personal holding in Kingfisher and big chunks in other group companies as well; and that the last time around he had arm-twisted (reliable banking sources tell us) the Reserve Bank of India into permitting banks to convert his debt to equity at a premium to the ruling market price? His working capital problems are on top of a Rs1,000-crore loss and Rs7,000-crore debt in 2010-11; Kingfisher shares have dipped sharply since the previous bailout. The King of Good Times, however, believes that using political clout to create bad loans in the books of banks is not a bailout. There is now speculation that Life Insurance Corporation of India (LIC) may be asked to buy a stake in Kingfisher.
That’s why Mr Mallya remains unfazed. After abruptly cancelling flights, he aimed a barrage of angry tweets at the media. One said, “Media including ‘paid media’ need to assume responsibility for d collateral damage they cause as a result of false n sensational reporting;” he also advised the SpiceJet CEO to “focus on his own Country and not give advise in India.” Agitated with media reports, which claimed that United Spirits shares dipped due to Kingfisher Airlines fears, Mr Mallya described the liquor company as ‘liquid gold’. But that’s exactly the point. The public wants Mr Mallya to use that ‘liquid gold’ to bail out Kingfisher and to use his clout as a member of Parliament (MP) to push for sensible aviation policies rather than the interests of his companies. Why is it that, despite ferrying around so many MPs to and from Parliament in “Kingfisher Xpress”, Vijay Mallya didn’t manage to persuade the government to have sensible investment and taxation policies for aviation? Instead, everybody stood around and watched Praful Patel and other ministers bankrupt Air India and allow other airlines to cannibalise its routes and rights!