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Kingfisher loses licence

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 31, 2012 19:13 hrs
Kingfisher Airlines submits revival plan

Kingfisher Airlines' flying permit, suspended by the Directorate General Of Civil Aviation (DGCA), expired today. However, the airline put up a brave face, saying there was no cause for concern as regulations permitted licence renewal within two years.

The Kingfisher Airlines stock fell 2.36 per cent to close at Rs 14.92 on the Bombay Stock Exchange. The benchmark Sensex fell 0.09 per cent.

The airline said it was confident of securing approval from the regulator to restart operations and that it was in the process of addressing the concerns raised.

The carrier had given a revival plan to DGCA, which had sought more details on funding. Questions were also raised by Civil Aviation Minister Ajit Singh and DGCA on the Rs 652-crore funding by UB Group mentioned in the revival plan.

Besides seeking more details on clearance of dues to airport operators, oil companies, etc, DGCA had asked Kingfisher to get an assurance from UB Group for the funding. It has yet to set a deadline for the airline to give these details.

The expiry of the licence is technical in nature, as DGCA sources have cited a provision through which Kingfisher could give a revival plan within two years. The airline will also need to convince banks, airports, tax authorities and its staff about its viability.

Despite the airline's licence being suspended in October, both the ministry and DGCA were silent on this provision until mid-December.

Kingfisher's airport slots would be retained. DGCA sources said: "Right now, there is no pressure from other airlines for those slots. So, we have retained those for KFA (Kingfisher Airlines)."

Experts believe the only impact of the licence expiry would be on investor sentiment. The company has held talks with Abu Dhabi-based Etihad Airways for sale of strategic stake to meet working capital requirements and salary payments to employees.

Kingfisher Airlines has debt of about Rs 8,000 crore on its books and accumulated losses and liabilities of a similar amount.

On October 20, Kingfisher's standard operating permit had been suspended following three weeks of lockout at the airline. This followed a strike by its employees, demanding payment of salaries.

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