Kingfisher Airlines submits revival plan, DGCA seeks clarity

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If not by 31 Dec, Kingfisher can submit revival plan in 2 yrs

DGCA wants the company to give a clear idea of its funds position in the revival plan. Reuters

The plan should have details as to whether Kingfisher Airlines has adequate working capital, whether it has enough funds to settle employees’ dues, whether its aircraft is airworthy and are pilots’ medical requirements fulfilled, the ET report said quoting the DGCA.

According to the report, the new conditions have been set as Kingfisher’s aircraft have been grounded for more than two months. As per the rules, if pilots do not fly for a month, their licence gets redundant, the report said.

Kingfisher Chairman Vijay Mallya, who has proposed to start limited operations by pumping in Rs 425 crore, has very little time left to fulfill all these requirements. It looks almost impossible for him to set all these right before 31 December.

DGCA Arun Mishra had told Firstpost earlier the airline is yet to come back with the revival plan.

The article had said that there are many hurdles to the revival of the airline.

It is also unlikely that competitors will take kindly to his plans to fly again, especially at a time when passenger loads and yields (revenue per passenger) are falling despite this being the peak holiday season.

Not only competitors’ manoeuvres, Mallya has a lot else to worry about too: He needs to ensure at least some dues to vendors are cleared.

Otherwise, how will the airline get continued fuel supplies, operate from some key airports where dues have mounted or even stop lessors from seizing aircraft?

There are tough conditions set. But at the same time, there are relaxations too.

So Mallya can be sure about one thing. Even if his 3 kg gold bricks offering to Lord Venkateshwara is not paying off, the government and  lenders

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Kingfisher plans to fly again, Mallya ready to infuse Rs 425 cr

PTI

“We have also shared full recapitalisation plan (with the lenders) which will be further discussed with a small designated group of bankers,” the Vijay Mallya-promoted airline said.

However, an airline source told PTI in New Delhi that it will soon submit a revival plan to the regulator DGCA, which will pave the way for revoking of the suspension of flying licence, which it had lost on October 20.

Apart from Mallya, from the airline’s side, the meeting was attended by UB Group chief financial officer Ravi Nedungadi and airline chief executive Sanjay Agarwal, while the 17-member lenders were represented by mid-level managers. However, a PSU bank official who also attended the meeting said that as per the tentative plan, Mallya told lenders he can resume operations with five aircraft, which is mandatory for a scheduled operator licence, and it could be scaled up to 21 planes within six weeks.

“Mallya has not sought any fresh funding from lenders. Though he did not convey how he will manage the funds, he assured us that he has the resources for the same. He also did not name the investors/airlines that he is talks with for stake sale, but asserted that he will be able to rope in someone only after he resumes operations,” Acharya told reporters.

SBI has exposure of Rs 1,500 crore to the Bangalore-based airline, which has turned a non-performing account since this January. So is the case with other 16 lenders who together had given Rs 5,500 crore to the airline.

Acharya, however, said the management did not give any timeline for implementing its revival plan, adding, “It is difficult to say when they will restart but our group of bankers will discuss it.”

Lenders have constituted a group of five banks from within the consortium to deal with the airline for resumption of operations. The members of the group are SBI, Punjab National Bank, Bank of Baroda, IDBI Bank and Bank of India, Acharya said, adding the first meeting of this group will take place in the next few days.

New grouping is aimed at speeding up the process and vetting the revival plan, he said.

Kingfisher, which has debt of nearly Rs 8,000 crore and accumulated loss and liabilities of a similar amount, has been grounded since October 1 after its pilots and engineers went on a strike over non-payment of salaries for seven months.

On whether the meeting discussed sale of non-core assets, Acharya said the issue did not come up for discussions as meeting focused on short-term starting of the services.”

Asked if the bankers are satisfied with the presentation Mallya made, he said, “The presentation was good but it requires some more details which obviously cannot be covered in one meeting.

“The licence is only suspended. They are confident there is no case for cancellation. They are in touch with the DGCA and this is one issue they should take care of,” Acharya said. When asked whether banks are open to restructure their loans to the airline for a second time in two years if Mallya
resumes operations, Acharya said, “If the limited restart takes place as discussed and if the small group of bankers are satisfied about the details of the limited plan, then we are not averse to debt restructuring.”

On whether the airline management had plans to fund the limited operations through Diageo stake sale proceeds, Acharya said, “All that money that has to come for resumption of operations may not (be) from Diageo deal but may be through the United Breweries.”

PTI

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