Kingfisher Airlines (KFA) CEO Sanjay Aggarwal on Monday submitted to the Directorate General of Civil Aviation (DGCA) an interim revival plan for limited resumption of the debt-ridden air carrier’s operations — with a funding of Rs 652 crore from UB Group’s resources over 12 months, as banks are unwilling to extend further credit.
The operations are planned to be restarted on a cash-and-carry basis, with airport operators and oil companies with a fleet of five Airbus and two ATR turboprop aircraft six-eight weeks after KFA’s licence suspension is revoked. DGCA sources confirmed, the fleet could be be scaled up to 11 ATRs and 10 Airbus planes within 10 weeks.
The plan, however, did not seem to have cut much ice with DGCA, as it did not give details on payment of dues to stakeholders like airport operators, oil firms, etc. A senior DGCA official said: “The Rs 652-crore funding would be for payment of Rs 120-crore salary dues, refurbishment of planes and daily operating losses. We are examining the plan and would require more financial details. The licence suspension will be revoked only after the stakeholders are convinced with the plan. We have received letters from the Airport Authority of India (AAI) and Mumbai International Airport Ltd not to let KFA fly until their dues are cleared.”
|Apr 2011: KFA has 20% market share, operates 65 aircraft and 300 flights|
|Nov 2011: Operational inefficiencies start cropping up. KFA plans to drop unprofitable routes to cut on operating costs. Salaries not paid, over 50 flights cancelled, DGCA carries out financial audit|
|Jan 2012: SBI declares loans to Kingfisher Airlines non-performing|
|Mar 2012: Tax department starts freezing KFA bank accounts|
|Oct 20, 2012: KFA does not reply to DGCA notice, licence suspended|
|Dec 24, 2012: Kingfisher submits interim revival plan to DGCA|
The Kingfisher CEO is understood to have informed DGCA that the salary dues would be cleared by giving two months’ wages and back wages each month from next month onwards.
While the airline had Rs 250 crore due to AAI, its officials claimed there were no dues to oil companies (except interest payments due to HPCL). KFA is understood to be negotiating with airport operators to settle their dues.
The airline has on its books a total debt of nearly Rs 8,000 crore, besides accumulated losses and liabilities of a similar amount. The plan is understood to have no details on clearing bank debt.
Also, KFA pilots would have to go for refresher training and medical tests before they start operating flights as they have not been flying for months now. An official said, with payment to lessors of the initial planned fleet on time, five Airbus and two ATR planes were ready to fly.
Boosted by the reports of the revival plan, the Kingfisher Airlines scrip shot up by five per cent to Rs 15.97 on BSE — its upper circuit limit on the bourse.
On October 20, DGCA had temporarily suspended the scheduled operator’s permit (SOP) of the Vijay Mallya-promoted carrier following a strike of its pilots and engineers over non-payment of salaries for several months. This had completely grounded its fleet. The SOP was, in any case, due to expire on December 31.