New Delhi: Sanjay Aggarwal , chief executive of Kingfisher Airlines Ltd , will meet the aviation regulator on Wednesday to give an update on the grounded airline’s plans ahead of a crucial meeting with lenders.
Lenders to the airline, which has $2.5 billion (around Rs.13,625 crore today) in debt, are expected to take a final call on the airline’s future on 18 January.
“A meeting was sought yesterday (with Arun Mishra, the director general of civil aviation, or DGCA). We have not been apprised of the agenda,” said a DGCA official. “They must be coming up with one of their now infamous and unworkable plans.” A second DGCA official confirmed that there will an early morning meeting. Both the officials declined to be named.
Kingfisher’s previous turnaround plan submitted in late December was junked by the regulator on grounds that it was not reliable. The same plan was reiterated last week by promoter Vijay Mallya to the airline’s 3,000 employees, who have not been paid since June.
Mallya said Kingfisher will fly seven planes from the summer season, funded with Rs.650 crore by the airline’s parent UB Group.
“The limited restart plan, which we target for the beginning of the 2013 summer schedule, requires funding of approximately Rs.650 crore, which is committed to be provided by the UB Group and associates,” Mallya said in the 10 January letter to employees.
That will not work, the first DGCA official said. “Rs.650 crore is just not enough. You start with losses from day one in an airline,” said this official, adding that the regulator wants to see a more credible plan.
Kingfisher lost about Rs.730 crore in the September quarter alone, when it was still operational. The airline’s operating licence was suspended in October and has expired since.
DGCA would like to see no-objection certificates from all airport operators, aircraft leasing companies, certificates of support from maintenance firms and spare part vendors of Airbus aircraft and the entire salary dues cleared before the airline can take to the sky again, the first DGCA official said. A section of Kingfisher employees has threatened to file a winding-up petition to recover pay while others want to go on hunger strike, according to an airline official, who declined to be named.
A private airport operator official, who too declined to be named, said Kingfisher had sought a middle ground with part payments in return for a no-objection certificate but that request has been denied until the dues are all cleared. The airline’s stock dipped 2.22% to Rs.14.07 a share on Tuesday on BSE. The benchmark Sensex index rose 0.4% to 19,986.82 points.
Kingfisher would require at least $30 million to make five aircraft airworthy and pay the lease rentals for a few months, said Shakti Lumba, former vice-president with IndiGo and Air India.
He added that DGCA has taken a stand similar to that taken for the erstwhile MDLR Airlines, which was asked to provide no-objection certificates to be allowed to restart operations. “MDLR debt was minuscule compared with this, but since the promoter wasn’t able to get investors on board, the restart could not happen and its licence that had lapsed over two years ago stands automatically cancelled,” Lumba said, “Unless he (Mallya) comes up with $1 billion, I see the same thing happening to him.”