Kingfisher Airlines has started paying February salaries to employees.
According to a company spokesman, this has provided some relief to the staff, including pilots, who recently threatened to go on strike.
On Thursday, banks had told the cash-strapped airline to come up with a concrete action plan to improve its operations within a fortnight.
Currently, the private carrier’s operations are hobbled. Its fleet strength has dropped to 13 from 64 last November.
With the debt-laden airline reportedly defaulting on lease rentals of over Rs 1,000 crore, lessors recently repossessed 34 aircraft.
Bankers say that given its current fleet strength and truncated operations schedule, the beleaguered airline cannot be turned around.
While the airline's promoter is banking on the proposed liberalisation in foreign direct investment in the aviation sector, bankers’ patience appears to be wearing thin. Debtor-creditor meetings held so far have not yielded any result.
The airline has been asked to put non-core assets — Kingfisher House in Mumbai and the promoter’s villa in Goa — on the block. This will lighten its debt burden, but only a tad.
Pointing out that the airline’s assets will barely cover 10 per cent of the Rs 7,000 crore, it owes a consortium of 17 banks, a senior public sector bank official said if banks precipitate action then the corporate guarantee and promoter guarantee for loans taken could be invoked.