Kingfisher to use own funds in bid to resume service

NEW DELHI Fri Oct 26, 2012 4:47pm IST

1 of 2. A passenger walks with her luggage in front of a Kingfisher Airlines reservation office at the domestic airport in Mumbai October 23, 2012.

Credit: Reuters/Danish Siddiqui

Stocks

   

NEW DELHI (Reuters) - Kingfisher Airlines Ltd(KING.NS), which had its licence suspended last week, will use its own money as it tries to resume flying, the Directorate General of Civil Aviation (DGCA) said on Friday, a day after the grounded carrier persuaded striking staff to return to work.

The aviation regulator also said Kingfisher would need approval for a revival plan from, among others, oil companies and airport operators, which have struggled to collect money owned by the cash-strapped airline.

Kingfisher, controlled by liquor baron Vijay Mallya, has not flown since the start of this month after a protest by employees, unpaid since March, turned violent. On Saturday, the DGCA suspended the carrier's licence over safety concerns.

Kingfisher, which was India's second-largest carrier before financial woes forced it to ground most of its fleet earlier this year, has been scrambling without success to find investors to bring in fresh capital.

"He (the regulator) said that the DGCA would like to get satisfied that all major stakeholders like airport operators, oil companies, MRO (maintenance and repair organisations), AAI (Airports Authority of India) are taken on board for supporting the airline's revival plan," the DGCA said in a statement after a meeting with Kingfisher CEO Sanjay Aggarwal.

"The CEO further informed that at present, the source of funding for the airline will be through their own resources," the DGCA statement said.

The carrier has yet to submit a revival plan with the regulator.

Kingfisher lobbied for a recent Indian rule change that allows foreign carriers to buy up to 49 percent of an Indian airline, but no carrier has publicly expressed interest in taking a stake.

Founded in 2005, Kingfisher has never turned a profit and its total debt is estimated at about $2.5 billion by the Centre for Asia Pacific Aviation (CAPA), a consultancy.

Kingfisher's shares rose 4.61 percent, effectively their daily limit of 5 percent, in line with gains made on Thursday after dropping by their limit for four consecutive sessions.

On Thursday, staff agreed to return to work after the airline said it would pay three months of overdue salary by November 13, and a fourth month by the end of the year.

(Editing by Tony Munroe and Daniel Magnowski)

Reuters Showcase

Markets Weekahead

Markets Weekahead

Column - Caution advised in a trader’s market  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

GDP Revised

GDP Revised

Economic growth revised up by almost 50 percent  Full Article 

Australian Open

Australian Open

Hingis wins Australian Open mixed doubles title with Paes   Full Article 

Houston's Daughter

Houston's Daughter

Bobbi Kristina Brown revived after found unresponsive in tub  Full Article 

India Art Fair

India Art Fair

Art fair turns India's capital into art hub.  Full Article 

Movie Review

Movie Review

"Rahasya" is an ode to Agatha Christie.  Full Article 

Review: Hawaizaada

Review: Hawaizaada

Movie Review: Hawaizaada  Full Article | Related Story 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage