Corporate Oct 25, 2012
Kingfisher Airlines employees are said to be divided on whether or not to accept the management's offer of three months' salary dues by Diwali. They may be morally right to hold out for more - since over seven months' salaries are due - but they should also consider this reality: waiting for more may increase their losses and force them to remain in a state of denial.
Here's a simple point: Kingfisher Airlines (KFA) is over. There is no job left. There may be dues, but the longer the employees hang on in the hope the job will return, the more disappointed they will be.
For those who are still unconvinced, I would recommend they read Spencer Johnson's classic parable Who Moved My Cheese?
KFA's cheese has moved.
In the book, there are two mice and two 'Littlepeople' who find a cache of cheese and are happy to live off it. As days pass, the cheese reduces in quantum, and one day it disappears altogether. But what is important is the reaction of the mice - appropriately named Sniff and Scurry - and the men, Hem and Haw.
When the cheese is gone, the mice know they have to start looking for more cheese. They get on with the job. The men stare at the empty larder in disbelief. They first refuse to believe the cheese is gone, and then curse their fate for it. They play victims. They keep coming to the former cheese station to check for miracles, but it takes a long time for them to realise that it's truly over. They have to hit the road for more.
One can empathise with KFA employees' anger and frustration over their airline's impending demise, brought on by the promoter's hubris and bad business decisions. There is no doubt who is to blame, but fixing the blame is not going to keep the home fires burning or help them obtain their rightful dues.
It is time for KFA employees to start looking for new jobs as the evidence that Kingfisher will never reopen is piling up.
Today's Economic Times tells us that KFA's banks are now up against one of their biggest losses in aviation history. The newspaper says the losses could top Rs 6,000 crore, since less than a third of the Rs 7,500 crore loans is covered by collateral.
In short, even the banks have now realised that their cheese has moved. What the airline's employees should ask themselves is this: if Vijay Mallya could leave the most powerful bankers in the country holding pieces of paper, why are they exempt from the same treatment?
A Business Standard report notes that Hindustan Petroleum has encashed its bank guarantee of Rs 434 crore against unpaid fuel dues. In short, banks have another bill coming to them. Hindustan Petroleum will get the money, but it is finally pulling the plug on KFA. Unlike the oil marketer, KFA employees have no such guarantee.
KFA's aircraft lessors are paying up dues owed by the airline to the Airports Authority of India so that they can reclaim their planes. They too have bitten the bullet. These planes are now being used by Kingfisher's rivals.
KFA's employees cannot be unaware that their airline is disappearing right under their noses.
Vijay Mallya may be tweeting to the effect that he is no absconder, but regardless of whether he is one or not, his employees should be in no doubt that their livelihoods have absconded.
Everyone, from the taxman to vendors is waiting in line for their dues. What is the chance that Mallya is ever going to do the right thing by his employees? Even paying the salaries would require bank lending. And banks are counting their huge losses.
If final proof were needed, the airline's conditional offer of three months' salary by Diwali should dispel any doubts. In emails to employees, CEO Sanjay Aggarwal has demanded the following acceptance format: "I hereby accept the terms and conditions of the mail below and confirm that I shall be reporting to work effective October 26, 2012. I assure you that I would adhere to my duties in a manner that does not cause any further disruptions of our operations."
If KFA again fails to deliver, the employees' hands will be tied. They have to sign away their rights to action.
KFA's employees clearly have to move on. Their cheese had been moved a long time ago. It is time they took whatever money Mallya offers them and run.
More From R Jagannathan.