In line of fire
New Delhi, Feb. 17: The Directorate General of Civil Aviation (DGCA) has said that if banks took over the assets of Kingfisher Airlines and sold them as a going concern, the new owners will be allowed to run the airline if they provide a viable long-term financial plan.
“The fate of Kingfisher is a matter of concern for its proprietor and lenders. Our stand has been clear from the beginning. The carrier will fly only if it has a viable financial plan; whoever brings it is not our concern. Even if someone takes over the airline, the terms and condition would remain the same,” said a senior DGCA official.
However, Kingfisher’s parent UB Group has indicated that it was in talks with the airline’s lenders to cut their exposure by using the proceeds from a stake sale in a group company to Diageo.
In November last year, UK’s Diageo agreed to buy a 53.4 per cent stake in UB Group-controlled United Spirits for $2.1 billion.
A consortium of 17 banks, which have lent about Rs 7,000 crore to the Vijay Mallya-led airline, said they would proceed towards recovering their loans by taking over assets which had been pledged.
According to the DGCA, the airline needs at least Rs 1,000 crore upfront to restart operations.
“Even at our last meeting CEO Sanjay Aggarwal said the airline needed more time. He claimed that Kingfisher would manage about Rs 652 crore over the next 12 months for running operations and said that funds from United Breweries would be transferred. However, the process never took place,” the official said.
The civil aviation regulator also said it would be unable to do anything for the employees of Kingfisher and that their fate depended on the lenders.
“It is up to the lenders to decide if they will pay employees their arrears. The employees can negotiate with the lenders as we cannot do much in this matter,” he said.
According to the law, when a company is bankrupt, the first charge out of liquidated assets has to go towards paying off employees.