Regional Round-Up
Regulator suspends Kingfisher's licence
November 1st 2012
How the mighty have fallen. Twelve months ago, Kingfisher Airlines was India’s second largest carrier with a fleet of 64 aircraft and many more on order, including five A380s.Read More »
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| Kingfisher Airlines: $1 billion needed for the grounded Indian carrier to return to the skies |
Today, the carrier is grounded, its licence suspended by India’s regulator and it is mired in hundreds of millions of dollars of debt.
Kingfisher had been out of service even before the Directorate General of Civil Aviation made its decision last month. On October 1 all flights were cancelled because of strikes over salaries. Staff said they had not been paid, in some cases, for up to seven months.
Even before that, the airline had only 10-12 planes in service reducing it from India’s second largest carrier, in terms of passengers carried, to the smallest.
“Kingfisher has not come to me with any operational plan [to revive its operations],” said director general of civil aviation, Arun Mishra. “Until it does its licence will remain suspended.”
Between its start-up in 2005 and June, Kingfisher lost an estimated $1.9 billion, according to the CAPA consultancy. It owes $2.5 billion to lenders, suppliers, leasing companies (which have repossessed around 30 aircraft) and majority shareholders. It has defaulted on at least $150 million in debt.
Kingfisher is now totally dependent on raising a minimum of $600 million “which is unlikely”, said the head of CAPA South Asia, Kapil Kaul. He said the turnaround would cost $1 billion.
Founder and chairman, Vijay Mallya, said he is in talks with potential foreign investors, including other airlines, about acquiring a stake in Kingfisher. He also has been in discussions to sell equity in his United Spirits group to raise money for the carrier. In the last six months, according to the Asia Wall Street Journal, Kingfisher’s parent, UB Group, has pumped 11 billion rupees ($204.3 million) into the carrier.
Kingfisher’s slots for the winter schedule have been allocated to other airlines.
