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India's Kingfisher halts flights for another week

Associated Press Modified: October 5, 2012 at 3:31 am •  Published: October 5, 2012
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MUMBAI, India (AP) — India's Kingfisher Airlines has extended its shut-down and won't fly any planes for another week unless it can convince pilots and engineers who haven't been paid for months to return to work.

Chief executive Sanjay Aggarwal has been crisscrossing the country to meet disgruntled employees but hasn't reached a deal, forcing the airline to prolong the shutdown that was meant to end Friday.

"We regret that the illegal strike has still not been withdrawn and normalcy has not been restored in the company, thereby continuing to cripple and paralyze the working of the entire airline," spokesman Prakash Mirpuri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

Workers are protesting over months of unpaid wages. India's airline regulator is worried about safety standards because engineers are on strike and can't certify that the planes are safe to fly.

"What we need is concrete plans from Kingfisher," Civil Aviation Minister Ajit Singh told reporters Thursday. "How will they maintain their schedule and how will they make sure their planes are safe to fly?"

Vijay Mallya, the flamboyant liquor baron who founded Kingfisher, built the airline in the image of Pan Am circa 1960, with stewardesses in short skirts and a reputation for good food and good service.

But Mallya never managed to translate that elegance into profit, burdened by problems such as high tax and fuel costs in India's hyper-competitive market, as well as bad decisions. Analysts frowned on the company's 2008 acquisition of budget carrier Air Deccan — Mallya himself dumped his low-cost business model in 2011 — and its ill-timed move into international service, just as the global economy tanked.

The company hasn't made a profit since it was founded in 2005, according to FactSet, a financial information provider.

Today, intensifying doubt that the cash-strapped carrier will be able to crawl out from its pile of debt drove the stock down 17.8 percent for the week through Thursday.

The airline's bad news deepened Friday, with a spate of front-page newspaper articles about the suicide of a Kingfisher employee's wife. Before hanging herself, the woman reportedly left a note saying that her husband hadn't been paid for five months and she could no longer cope with the financial stress.

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