Thejudge13 reported last week that a family member of Kingfisher airlines staff was reported to have committed suicide due to financial ruin by Indian police (link)
Vijay Mallya’s Kingfisher airlines have been grounded now for 2 weeks and are on the brink of financial ruin: “The Economic Times” (click on search, put in “Kingfisher” and you’ll see a number of articles over the past few months), Police said last week that the wife of an employee who had not been paid since March committed suicide last week due to the stress of financial ruin. Before the Japanese GP staff were demonstrating as they had not been paid for months and this lead to violent confrontation.
Airline start up
The history of airline start up’s in the past 50 years is littered with failure. Around 9/10 fail owing hundreds of millions of dollars. The problem is not in the early days, as the entrepreneur identifies a few profitable routes, invests about 50% required and gets the project off the ground. Where the issues begin is when they wish to expand. Due to initial success they find financial backers prepared to put up vast sums of money for their expansion.
Each route they take on is incrementally less profitable and it only takes a dip in trade for a short time for them to struggle to generate enough cash to pay the interest on the loans. In the case of Kingfisher airlines they owe $billions.
Kingfisher have followed the failed path of many before them and have in recent weeks been under the threat of having their license revoked by the Indian Aviation Authority. They were instructed last week not to sell any more tickets untill their issues were proven to be finding some resolution.
The airline has claimed recently they are about to receive a huge injection of middle eastern cash to resolve they’re funding problems, and the banks knowing they are about to lose fortunes have suggested they might as well hang on and see if this comes to fruit.
Vijay Mallya owns an international liquor business (Whyte and Mackay) that has attracted recent investors interest who have made offers to acquire it. The price offered Mallya believes is below market value and has refused to sell. If he sold this would relieve the debt problems on the airline and satisfy the banks and pay his long abused staff. However, it appears he has little faith in the sustainability of Kingfisher Airlines and would prefer to let them go to the wall rather than cash in another investment and pay the creditors.
Today, Force India’s billionaire team owner Vijay Mallya has had an arrest warrant issued against him by the southern Indian city of Hyderabad, according to reports in the Indian press and AFP news agency.
The warrant, which is non-bailable, relates to the non-attendance of the company summoned to a hearing over bounced cheques issued for several million dollars. The non-bailable warrant means if Mallya does offer himself up to the jurisdiction he will be detained in a cell.
The airline has failed to generate a profit since its launch in 2005. It has grounded its fleet for the past two weeks.
F1 image affected
To not bother to send anyone to the court to deal with what was an administrative hearing speaks volumes. No one at Kingfisher must believe there is a solution and so are resigned to their fate demonstrated by they’re dismissive treatment of a legal summons.
Force India have also been involved in a lengthy dispute with Caterham and Mike Gascoigne, and the UK high court ruled that they had not paid Caterham moneys due of nearly £1 million. Mallya had 21 days to pay, 3 months ago and has still defied the UK courts and not complied. Vijay Mallya when questioned about his solvency has bragged his personal assets including opulent yachts, mansions and commercial property are legally protected and can’t be taken by the court as collateral on the airline or F1 team debts.
Let’s not forget, while Mallya flies the world in private jets and stays in luxury Hotels at $10,000 a time, he has staff family members who are starving, dying and in ruin induced by his choice not to pay them. Is this a suitable individual to have with the profile of Team principle in F1?
Just as Premier League football has finally done, Its time for FIA to vet the financial stability and quality of F1 team owners to prevent such a terrible state of affairs – and they should further sanction the dismissal of such persons who fail to consistently meet their obligations.
Further, the F1 press and TV media are in disgrace for not reporting this matter in past weeks, whilst obsessing over Lewis Hamilton’s tweets. That itself is an indication of the indifference the F1 circus has towards anything other than their own froth.
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