* ILFC says removes one A321 after Kingfisher default row
* Lessor says five other aircraft still stranded in India
* AIG unit in discussions over four jets with Cyprus Air
By Tim Hepher
PARIS, March 25 (Reuters) - Aircraft lessor International
Lease Finance Corp said on Monday it had successfully
removed one of six aircraft stranded in India by a dispute over
the suspension of operations at Kingfisher Airlines.
Financiers have warned that failure to resolve the dispute
between creditors over the grounded carrier's unpaid bills could
starve India of funds needed to develop its aviation industry.
Los Angeles-based ILFC, which has complained its aircraft
are being held "hostage" in the dispute, said it had been able
to remove an Airbus A321 jet following a High Court decision in
New Delhi on March 15. It still has five A320 jets in India.
"One of the hostages has been freed; we are worried about
the others," ILFC Chief Executive Henri Courpron said in a
Kingfisher, controlled by liquor baron Vijay Mallya, has
been halted due to a cash crunch. Lenders are trying to recover
$1.4 billion of loans in default, but disagreements over who
should take precedence have left jets stranded.
Germany's DVB Bank said in December it had sued
India's aviation regulator and Kingfisher to have two planes it
financed for the troubled carrier de-registered, a possible
first step toward recouping its funds.
The fate of Kingfisher's jets is seen as an important test
of an international agreement known as the Cape Town convention,
designed to make it more attractive for leasing companies to
invest by duplicating U.S.-style repossession rights.
AIG subsidiary ILFC does business with three other
airlines in India -- Air India, Spicejet and Jet
Airways -- but has frozen fresh investments in the
country pending a resolution of the Kingfisher default row.
ILFC meanwhile has four aircraft operating with Cyprus
Airways, the flag carrier of the Mediterranean nation engulfed
in the latest chapter of Europe's financial crisis.
"We are in constant communications with Cyprus Airways and
are working out our situation with them," Courpron said.
He declined to comment on whether the airline was up to date
with lease payments on its fleet of Airbus aircraft.
Europe's financial crisis has seen several airlines
including Spanish carrier Spanair and Hungary's Malev go
bankrupt, forcing lessors such as ILFC to recover their jets.
Some of Spanair's leased jets ended up being operated by
Vueling, the Spanish budget carrier which is fighting a bid by
46-percent owner International Airlines Group.
Courpron said recent developments in southern Europe had
demonstrated that it was important, for aviation to operate
smoothly, that aircraft were seen as fungible or mobile assets
and that he believed Indian courts had understood this.