Mumbai: Kingfisher Airlines, the country’s third largest by market share, said on Thursday one of its lessors, AerCap Holdings NV, would take back two of its aircraft in coming months as both the companies could not agree on extension terms.
The two jets were coming up for renewal in the next three months, a spokesman for Kingfisher told the news agency.
Kingfisher Airlines chairman Vijay Mallya speaks during a media conference. Photo: AP
“The aircraft will soon be in a MRO (maintenance, repair and overhaul) for preparation and redelivery,” he added.
Kingfisher, which has cancelled scores of flights in November and now has around 300 flights daily including international, would add a new aircraft to the fleet in December to replace one of these two.
A majority of its fleet of 66 aircraft are taken on lease.
The spokesman also said lessors have the contractual right to access documents for all their aircraft on an as-needed basis.
The Wall Street Journal on Thursday reported at least two lessors have agents at Kingfisher’s offices copying documents relating to their planes.
Cash-strapped Kingfisher, controlled by flamboyant liquor tycoon Vijay Mallya, is struggling to raise funds.
The company has pushed back deliveries of Airbus’s A380 superjumbo airliner and is also set to cancel orders for two A340 aircraft.
Earlier this week, Kingfisher had said its aircraft manufacturers have provided financial support to it and had agreed to a cut in prices.
It has asked banks to offer guarantees to lessors to help it release about Rs 10 billion locked up with the lessors.
At 12:04 pm, shares in Kingfisher, valued at $231 million, were trading down 0.82% at Rs 24.15 in a weak Mumbai market.
The stock has lost more than 63% of its value so far in 2011, compared with a 23% fall in India’s benchmark index.
Kingfisher, which has never made a profit, is in talks with an Indian investor for equity funding. Chairman Mallya last week met a consortium of lenders, led by State Bank of India (SBI), in an effort to shore up its finances and get additional working capital.
But banks have been wary of lending to airlines, which are on course to post record losses this fiscal year, hit by high fuel prices and an ongoing price war.
Auditors of Jet Airways, India’s leading carrier said this month that the airline has to raise funds or generate cash flows to meet obligations.
Kingfisher’s auditors had made similar observations and also said its method of accounting of costs incurred on major repairs and maintenance of aircraft is not in accordance with generally accepted accounting standards in India.
But Kingfisher has said the practice is consistent with other major international airlines.