Lufthansa, Modiluft Patch Up

S K Modi-promoted ModiLuft has agreed to return the four Boeing 737-200 aircraft it took on lease from Lufthansa Airlines. This follows a negotiated settlement hammered out between Modi and Lufthansa senior vice-president Dieter Heinen in London recently.

However, Lufthansa clarified that the settlement does not amount to a revival of its agreement with the S K Modi group. Lufthansa enjoys normal airline industry relationships with many airlines around the world, including Indian Airlines and Jet Airways in India. If and when Mr Modi relaunches his airline, Lufthansa will have nothing to do with it. We have no information at this point in time who Mr Modis new partners will be, Lufthansas director, corporate communications (Asia Pacific) Kavin Sethi told Business Standard,

A joint release by the two companies yesterday stated, A comprehensive settlement plan that resolves all outstanding issues that have been the subject of litigation between the two organisations has been agreed to. The terms of consent resulting from the negotiated settlement between the two air carriers were filed in and accepted by the Supreme Court on August 14, added the release.

Meanwhile, ModiLuft is exp-ec-ted to shortly resume its operations, which have been suspended for more than a year. The release quoted S K Modi as saying, We are thankful to Lufthansa for helping to make ModiLuft a success during our association with the German airline. ModiLuft is poised for an early re-launch and will, once again, participate in a normal airline industry relationship with Lufthansa in future.

The two companies had parted ways after the Indian partner accused Lufthansa of not abiding by its funding commitment. In turn, the German airline alleged that ModiLuft had defaulted on lease payments for the four Lufthansa aircraft. The German airline had tied up with the S K Modi group in 1994.

Lufthansa even deputed three senior executives to ModiLuft as senior vice-presidents to handle the day-to-day affairs of the Indian airline. However, the relationship soured in mid-1996 after Modi began putting pressure on Lufthansa to take a stake of up to 40 per cent in the Indian carrier.