* Kingfisher faces govt deadline to explain why it shouldnot be shut
* Kingfisher yet to get lifeline from any investor * Shares fall by daily limit for eighth session
NEW DELHI, Oct 10 (Reuters) - The CEO of India's KingfisherAirlines Ltd , grounded since the start of the month,urged striking employees to return to work as the carrierscrambled to find solutions to its cash flow problems.
Shares in the carrier fell 5 percent, their daily limit, forthe eighth straight session on Wednesday as investors lose hopethat the airline controlled by liquor baron Vijay Mallya willget a lifeline from a foreign airline or another saviour.
The carrier has until the end of next week to explain to thegovernment why it should not be shut.
"Without all of you, without exception, coming back to work,we will have no way forward," CEO Sanjay Aggarwal said in aletter to employees on Tuesday.
"We have been working relentlessly to try and rectify thissituation, and that too against all odds," Aggarwal wrote in theletter seen by Reuters.
Kingfisher has so far failed in its long-running search foran investor and is $2.5 billion in debt by one estimate. Thecarrier has grounded its fleet since Oct. 1 after an employeeprotest turned violent.
Staff, who have not been paid for seven months, held protestmarches late last week after what police said was the suicide ofa Delhi-based employee's wife worried about her family'sprecarious finances.
Meetings last week between the carrier and pilots andengineers demanding their back pay failed to reach an agreement.
Late on Friday, India's aviation regulator sent a"show-cause" notice to Kingfisher asking why its license to flyshould not be cancelled after failing to provide a "safe,efficient and reliable service."
The airline was given 15 days to respond.
The regulator has also asked Kingfisher to stop sellingtickets until its concerns are resolved.
"We are aware it is a big ask, but no potential investorwill put his money in an airline that is not operational.Neither will our esteemed guests come back to us unless wecommence operations soon," Aggarwal wrote to staff.
Kingfisher, once India's second-biggest airline, last weekextended what it has described as partial lock-out until Oct.12.
India recently allowed foreign airlines to buy a maximum 49percent stake in local carriers, a move long lobbied for byKingfisher, although no airline has publicly expressed aninterest in investing in Kingfisher.
Mallya's United Spirits Ltd and Diageo Plcrecently confirmed long-rumoured talks for the UK giant to takea stake in India's dominant whisky maker, which could make iteasier for Mallya to find funds to rescue Kingfisher.
Since India's investment policy change, "the dialogue withpotential investors has gathered momentum," Aggarwal said.
"Even non-strategic investors are showing interest ininvesting in Kingfisher Airlines, which is a good sign."
Kingfisher has never made money since its launch in 2005,and before grounding its fleet last week, it was flying just 10planes out of fleet that numbered 64 a year ago.
(Reporting by Anurag Kotoky; Editing by Tony Munroe and RyanWoo)
Keywords: INDIA KINGFISHER/STAFF