Cancelled flights, pilots quitting, delayed salaries and media frenzy; things don’t seem to be getting any easier for Vijay Mallya. Once known as the ‘party man’ with the spirit of Christmas, who happily embraced the media and even used it to his benefit, Vijay Mallya has been reduced to being the latest prey of the media, bombarded with unwelcomed questions, the future of his empire being debated about in a way that has left him seething with silent rage. At this point in his life, in the midst of the blame-games, the pestering interruption by the media and the burden of it all, whom does Vijay Mallya turn to? Twitter. Yes, exactly. Mallya, in his tweets, has accused the press of sensationalising the whole issue and blowing it out of proportion. He has said that debts are not something peculiar to Kingfisher alone, or any other airline of its size and magnitude. He has also directed his sarcasm towards Neil Mills, CEO of SpiceJet, by politely asking him to keep his nose out of India’s problems.
This is not the first time Kingfisher has landed into this soup. With an estimated debt of a staggering Rs. 7500 crore, the shore of this sea appears blurry. Controlling the costs is another huge problem that Mallya is facing. Critics say that even if half of his fleet is taken away from him, it’ll in no way help him cut down on his costs. Mallya’s problems rooted from the time he decided to introduce Kingfisher Red as an economic airline. While Kingfisher is a luxury airline, Kingfisher Red is a low-cost airline with a five star appeal. As the difference in quality and service between both the airlines diminished, more and more customers started shifting to the latter. To combat this problem, Kingfisher increased its rates to more than what its competitor, like IndiGo, charged. This again caused a rampant shift of customers to the competitors of Kingfisher Red. Things have pretty much gone downhill for Kingfisher from 2008. Kingfisher’s liabilities stand at Rs. 5000 crores, similar to that of Jet Airways. The only difference is in the two airlines’ quarterly sales, with Jet Airway’s sales slightly exceeding twice the sales of Kingfisher’s.
A personal guarantee of Rs 248.97 crore has been given by Mallya as security against the loans he has taken from several banks. Kingfisher has been struggling relentlessly for months now, and has been cancelling flights and delaying employee payments. With Kingfisher’s impending doom looming large, no banks are willing to enact a second round of loan restructuring. In the press conference on 15th November, Mallya blamed the rocketing fuel prices and the depreciating value of rupee as the main reason behind this mess. He had also said that the airline was in talks with a certain investor, who could potentially invest Rs 1000 crore in Kingfisher. Mallya had agreed that one way of raising money was to increase the rates, but he also confessed that the airline ‘gets stuck’ when they try to do that.
While Kingfisher debt and woes are closing in, Vijay Mallya remains confident that the airline will make it through the difficult times and have a better tomorrow. Mallya believes that it will fly itself out of the mess, just as it had landed itself there. Well, we are keeping our fingers crossed, Mr. Mallya.