Kingfisher revival plan not enough to restart operations - official

NEW DELHI Fri Jan 11, 2013 12:26pm IST

Women walk past a closed booking office of Kingfisher Airlines in New Delhi October 1, 2012. REUTERS/Mansi Thapliyal/Files

Women walk past a closed booking office of Kingfisher Airlines in New Delhi October 1, 2012.

Credit: Reuters/Mansi Thapliyal/Files

Stocks

   

NEW DELHI (Reuters) - Kingfisher Airlines'(KING.NS) planned investment of 6.5 billion rupees as part of a plan to return the airline to the skies is not enough to restart operations at the troubled carrier, a senior aviation regulatory official said.

Kingfisher, which lost its operating licence at the end of 2012 and has not flown since the start of October, is estimated to owe $2.5 billion in debt to banks, staff, vendors and others and is scrabbling to find new investors.

The revival plan, which Kingfisher Chairman Vijay Mallya filed last month with the Directorate General of Civil Aviation (DGCA), may not guarantee a reliable service, a senior official at the regulator with direct knowledge of the plan said in a briefing to journalists on Friday.

"There are a lot of issues regarding lenders, staff payment which we felt may not lead to reliable services. The plan has no provision for airport dues. There should be no inconvenience to passengers," said the source, who declined to be named.

Mallya wrote in a letter to Kingfisher staff that the revival plan would be funded by the airlines' parent UB Group and would involve using seven planes for the start of the summer season.

A spokesman for Kingfisher declined to comment when contacted by Reuters.

Shares in the airline, which surged as much as 10 percent on Thursday on news of the revival plan, were little changed on Friday.

Kingfisher, once India's second-largest airline, has tried unsuccessfully for over a year to bring in new investors. The airline held talks with Gulf carrier Etihad Airways in December, sources said, which did not lead to an investment.

DGCA suspended the airline's licence to fly in October after months of cancelled flights and staff walkouts.

(Reporting by Anurag Kotoky; Writing and additional reporting by Henry Foy in MUMBAI; Editing by Jeremy Laurence)

  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

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