The Telegraph
Tuesday , January 1 , 2013
Since 1st March, 1999
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Permit loss adds to Kingfisher woes

New Delhi, Dec. 31: Kingfisher Airlines’ licence to operate expired today as the airline’s prayers for a last-minute reprieve from the aviation regulator remained unanswered.

“We have not taken any decision as yet on Kingfisher’s licence. We are waiting for more details,” highly-placed sources in the Directorate General of Civil Aviation (DGCA) told a news agency in the afternoon.

According to DGCA officials, the grounded airline can get its licence renewed within the next two years.

ModiLuft, one of India’s first post-deregulation airline launched in May 1993, was one such airline whose licence was renewed after it was taken over by SpiceJet.

However, loss of an operating licence, will drastically reduce valuations for the loss-laden airline and make it even more difficult for owner Vijay Mallya to sell the airline.

“KFA will now find it hard to woo foreign investors. However, DGCA’s condition would give it some time as it can get back its licence if at all it manages to get funds,” said U.K Bose, former president and CEO of Sahara Airline and an aviation expert.

Last week, the airline had submitted a revival plan to the DGCA but did not provide details of how it planned to raise funds to re-start the grounded airline.

Rumours about a stake sale to Etihad Airways have swirled in recent weeks but no deal has been struck, leaving the airline desperately short of cash and scrambling to meet its debt obligations.

Kingfisher had temporarily shut down operations on October 20 after aviation regulator DGCA suspended its flying licence. On Monday, the KFA stock plummeted almost 1 per cent to Rs 15.13 in thin trading.

According to sources, KFA vice- president Hitesh Patel has met DGCA officials over the issue. The aviation regulator has asked the airline to submit a detailed plan as the present turnaround plan is sketchy. Officials said DGCA has asked for a letter of promise that will elaborate on the airline’s future financial and budgetary details.

“Kingfisher has to give us written proof about where the funds will come from. It has promised Rs 652 crore infusions but if this is to come from the UB group, we need some proof from United Breweries. The company has made it clear that the two though owned by the same group were separate entities,” said a senior DGCA official.

In an official statement, Kingfisher today said, “Despite the impending expiry of the (flying) licence tonight, there is no cause for concern as regulations permit licence renewal within two years of expiry.”

Kingfisher Airlines has already applied for renewal of its licence as a scheduled carrier and has subsequently submitted a restart and rehabilitation plan to the regulator, it said. “The plan itself clearly states that the funding required would be provided by the UB Group,” the statement said.

The DGCA has asked for certain no-objection letters, which are in the process of being procured, while a few additional questions have been raised, which will be answered to the regulator’s satisfaction, the airline said.

The airline is confident of securing approval from the DGCA on the restart plan, its licence approval and reinstatement of its air operator permit, the statement added.

The airline’s losses ballooned to Rs 753.55 crore in the quarter ended September 30 even as revenues sank to just Rs 200 crore. In the same quarter a year ago, it had reported revenues of Rs 1,528.16 crore.

The airline, which had tried hard to alleviate the pangs of joyless travel with pretty airhostesses, a stab at customised cuisine, and varied in-flight entertainment, crumbled after creditors refused to extend the lifeline to Mallya’s uniquely-scripted concept of a full-service airline.

Kingfisher has fought for close to a year to raise the money to pay salaries to its pilots and crew, fork out taxes to the government, arrange payments for leased planes, and settle mounting aviation fuel bills.