--Airline employees have until Thursday to respond to offer

--Airline CEO doesn't elaborate on rest of the pending arrears

--Airline likely to meet lenders end Oct or early Nov

(Adds details from company executive, employees and SBI executive)

 
   By Anirban Chowdhury and Ashutosh Joshi

MUMBAI--Kingfisher Airlines Ltd. (532747.BY) Monday tried to woo its striking employees back to work by offering them three months of pending salaries before mid-November.

The employees will reply by Thursday whether they accept the offer. Kingfisher hasn't paid most of its employees for eight months. Its pilots, engineers and technicians have on strike since Oct. 1, forcing the airline to cancel flights indefinitely.

Kingfisher's offer comes after a more-than-two-week stalemate between the management and employees over pay. The airline's chief executive Sanjay Aggarwal and its executive vice president Hitesh Patel had in the past few meetings tried to persuade its staff back to work. But they had only said the airline will try to clear a month's salary soon.

Resuming operations is vital for Kingfisher, which faces the possibility of a complete shutdown. The airline's license was on Saturday suspended by the country's aviation regulator, after it failed to produce a plan to revive its operations.

Kingfisher, unprofitable since its inception in 2005, has accumulated losses of $1.9 billion between May 2005 and June 30, 2012, according to a recent report by Sydney-based consultant CAPA-Centre for Aviation. The airline also owes about $2.5 billion to its lenders, suppliers, leasing companies and shareholding companies.

After meeting some staff representatives on Monday, Mr. Aggarwal said he expects the employees to accept the offer. He added he expects them to return to work on Friday.

Mr. Aggarwal didn't elaborate when the airline will clear the remaining five-month arrears, nor did he specify where the cash-strapped company got the funds to pay three months' salaries.

Kingfisher's employees were divided in their immediate reaction to the management's offer.

Vikrant Patkar, a senior pilot who claims to represent the airline's pilot union, said he "didn't see a reason why people should not accept it." But a second pilot and a senior engineer who didn't want to be named said the offer wouldn't be acceptable to the employees.

Earlier in the day, Director General of Civil Aviation Arun Mishra told the Wall Street Journal he will cancel Kingfisher's license if the airline doesn't produce a viable operations plan soon. Under the suspension, Kingfisher can start operations the day it gets an approval from the regulator. If its license is cancelled it will have to re-apply for one and wait much longer to start flying.

Mr. Aggarwal said Kingfisher will take two weeks to come up with a viable operational plan, provided its employees return to work Friday.

The airline is also likely to meet its lenders by end October or early November, S. Viswanathan, managing director at its biggest lender, State Bank of India Ltd., said earlier in the day. Kingfisher has been refused more loans from banks, given its weak financial health. The airline's chairman Vijay Mallya in September said he is in talks with foreign investors, including airlines, to sell stake in the carrier. He also said the company is in talks with Britsh liquor firm Diageo PLC (DEO) to sell stake in group company United Spirits Ltd., as part of plans to raise cash for Kingfisher.

Write to Anirban Chowdhury at anirban.chowdhury@dowjones.com and Ashutosh Joshi at ashutosh.joshi@dowjones.com

--Nupur Acharya and Khushita Vasant from Mumbai contributed to the article.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires