Kingfisher Airlines set to lose flying licence today
Last week, Kingfisher Airlines had filed a revival plan with the DGCA. Chairman Vijay Mallya's United Breweries group said it will invest Rs. 652 crore in the airline as part of the turnaround plan.
However, Aviation Minister Ajit Singh said Kingfisher Airlines has failed to present regulators with a clear funding plan under a proposal to get it flying again. UB "did not say they are going to give anything" to Kingfisher, which has estimated debts of $2.5 billion, Mr Singh said.
The minister did not specify if the proposal, to resume operations with five planes, had been rejected. But he noted that the airline owed money to banks, staff, airports, and tax authorities.
All those stakeholders needed to be convinced the re-launch plan was viable before the DGCA allowed the airline to fly again, Mr Singh said.
The DGCA wants all creditors to agree to the revival plan submitted by Kingfisher, and has not decided on its course of action, sources told Reuters.
The carrier can apply to renew its licence within two years from the day it expires.
Kingfisher shares traded lower for a fourth day in a row. The stock was down 0.2 per cent to Rs. 15.25 on the BSE at 09.47 a.m. Other aviation stocks - Jet and SpiceJet - also traded lower, down 0.85 per cent and 1.9 per cent respectively in a flat market.
Kingfisher shares are up 15 per cent for the month since November 30, recovering sharply from their all-time low of Rs. 7.05 hit in August.
Launched in May 2005, Kingfisher has not reported a profit ever and has bank debts of more than Rs. 7,000 crore and unpaid interest since January apart from over Rs. 1,000 crore in vendor and tax arrears. It also has accumulated losses of nearly Rs. 10,000 crore, apart from the salary dues of the past eight months.
Kingfisher, which has been trying unsuccessfully to raise fresh cash for more than a year, is hoping to tap Etihad Airways as an investor.
The Gulf carrier, which is seeking to widen operations in India and other Asian markets, is in the final stages of talks to buy part of either Kingfisher or Indian rival Jet Airways, an Indian government official told Reuters earlier.
(Source: NDTV and With inputs from Reuters. First published on Dec 31, 2012)