Kingfisher Airlines
Kingfisher flight IT 3149 at an isolation bay of Chattrapati Shivaji airport in Mumbai May 20, 2010. REUTERS

The crisis in the near-bankrupt Kingfisher Airlines compounded Tuesday as the private Indian air carrier failed to pay the pending salaries for the month of May to its over 3,000 employees before Diwali, as promised.

After arriving at an agreement with the striking employees last month, liquor baron Vijay Mallya-controlled airline announced a staggered payment of the pending salaries.

The company was expected to pay the second installment of salary dues before Diwali, the festival of lights, according to the agreement.

However, the employees were still in dark about their salary dues as the management had not honored their commitment. "3,000 employees got a Diwali gift from Chairman Vijay Mallya in the form of no salary despite his commitment," sources told PTI.

"It is a dark Diwali for us. The management has once again failed to keep its commitment on payment of salary dues. We did not receive salaries in our account till late last night, although the management had made tall claims of clearing our dues by the festival," they said.

The private airline has grounded operations since October 1 when a section of its staff, including the engineers and pilots, went on strike demanding the payment of salaries pending since March 2012.

The Directorate General of Civil Aviation suspended the license of the airline after it had failed to operate flights and respond positively to a show-cause notice issued by the aviation regulator.

The airlines has a debt burden of over Rs. 50 billion to its creditors and vendors and risks losing its license permanently if it fails to come up with a turnaround plan by the end of November.

The airline’s management maintains that it will infuse funds to the ailing carrier, but it has failed to bring in investment.

It was speculated that Mallya and United Breweries would invest in Kingfisher Airlines a part of the proceeds from the United Spirits stake sale to Diageo. However, Mallya recently asserted that he would not mix his businesses and would bring funds to the airline from elsewhere.

The non-payment of the salary dues could cost the management dearly. The employees, who were initially reluctant to accept the management’s offer of a deferred payment of salaries, are likely to resume the strike if the airline fails to keep the promises.