Two weeks after Kingfisher Airlines' promoters pledged their entire stake to its lenders, the carrier faced fuel supply disruptions and flight delays on Monday due to unpaid fuel bills, an incident that was confirmed by the airline's spokesperson on Tuesday.

“Due to a misunderstanding with our vendors, 12 flights out of 370 daily flights were delayed. The issue has since been resolved,” the spokesperson said.

Fuel Bills

The airline has Rs 500-crore worth of unpaid aviation turbine fuel bills due to Hindustan Petroleum Corporation Ltd (HPCL). Of this, around Rs 450 crore has been backed by bank guarantees. Indian Oil Corporation (IOC) too has put the airline on a cash-and-carry mode.

The company has so far not disclosed the extent of its dues to Bharat Petroleum Corporation Ltd (BPCL). “It's not just Kingfisher, other airlines too have dues which we need to recover,” said an HPCL official. For instance, national carrier Air India's dues to the public sector oil companies stand at a whopping Rs 2,400 crore.

Unpaid Airport Bills

Kingfisher's unpaid bills go beyond oil companies. The airline recently faced the prospect of being put on a cash-and-carry mode by the GMR-operated Delhi and Hyderabad airports. The airline failed to make its payments in April and May and notched up dues of approximately Rs 100 crore to the two airports.

Kingfisher Airlines was able to escape being put on cash-and-carry only after it outlined a payment structure plan to clear the dues.

Mounting Debt

The airline's total debt stood at Rs 7,651 crore last year, but it managed to bring that down to Rs 6,007 crore after a debt recast plan with its lenders. Mounting debt is an industry-wide problem. Jet Airways had a debt of Rs 13,680 crore as on March 31, 2011.

Kingfisher's promoters, however, had to pledge their entire stake to the lenders as part of its debt recast plan. Since its inception in 2005, the airline has only had one profitable quarter.

With their stock price falling sharply, the airline also runs the risk of losing its assets to the lenders. “Their planes might need to be hypothecated to the bank if they start to default on bank payments and fail to turn around,” said a market analyst.

Since January this year, the Kingfisher Airlines stock price has fallen 71 per cent, from Rs 66.85 on January 3 to Rs 38.95 yesterday.

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