Kingfisher Airlines extends grounding of fleet

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Embattled Kingfisher Airlines Ltd will ground its fleet for another week after failing to resolve an impasse with staff over salaries that have not been paid for more than half a year.

The airline, which is controlled by liquor baron Vijay Mallya and has never turned a profit, has been effectively shut since Monday after a weekend protest by members of staff turned violent.

"We regret that the illegal strike has still not been withdrawn and normalcy has not been restored in the company, thereby continuing to cripple and paralyse the working of the entire airline," spokesman Prakash Mirpuri said in a statement late on Thursday.

He said the airline was extending what it describes as a partial lock-out to October 12, 'or up to such earlier date on which the said illegal strike is called off'.

Talks between airline management and Delhi-based pilots and engineers on Thursday failed to resolve the standoff. Similar talks in Mumbai on Wednesday ended in what one senior pilot called a stalemate.

Kingfisher's company secretary Bharath Raghavan has also resigned, the airline said on Thursday.

Before this week, Kingfisher, once India's second-largest airline, was flying only 10 planes out of a fleet that once numbered 64.

Kingfisher is saddled with $1.4 billion in debt, owed mostly to government banks led by State Bank of India, and has failed thus far in its efforts to find an overseas airline or other investor to inject fresh equity into the company.

An official with India's aviation regulator said on Tuesday that Kingfisher would not get government approval to resume flying unless it pays salaries and submits an acceptable recovery plan.

Kingfisher plans to use Rs 600 million in bank accounts frozen by authorities to pay staff, the industry regulator had said.

Tax officials froze the airline's accounts earlier this year after it failed to deposit taxes deducted from staff.

Kingfisher's employee expenses for the year that ended in March totalled Rs 6.7 billion, although many staff have left since then.

On Thursday, Kingfisher shares fell 4.8 per cent to Rs 13.90, effectively at their daily limit of 5 per cent for the fourth straight session.