Kingfisher Airlines has reportedly told the civil aviation regulator, Directorate General of Civil Aviation (DGCA), that it is ready to fly the moment the suspension of its flying licence is revoked. The airline, which agreed this week to pay overdue salaries to its staff, will source funding from its own resources to get the grounded carrier flying, the DGCA said on Friday.
DGCA sources said the airline expects a fund infusion from parent, the Vijay Mallya controlled-United Breweries group, to see it through the next few months.
The regulator has asked the debt-ridden airline to prepare and submit its winter schedule. "The (Kingfisher) CEO (Sanjay Aggarwal) further informed that at present, the source of funding for the airline will be through their own resources," the DGCA said.
The airline needs approximately Rs 20 crore every month to fund its wage bill. Employees have not been paid for seven months now, but pilots and engineers ended a 25-day strike yesterday, accepting the management's offer to pay them three months' salary in tranches by Diwali, November 13, and then another month's salary by December.
After the strike was called off yesterday, the airline also lifted the lockout it had announced. But the resumption of Kingfisher's flights may take at least three to four weeks as the airline first has to satisfy the DGCA on safety issues as well as the viability of its financial and operational plans.
Today, after his meeting with Arun Mishra, the Director-General of Civil Aviation, Kingfisher CEO said, "It was a general meeting. We had a discussion with the DGCA to get a better understanding about presenting the revival plan (for the airline). We will get back to them very soon."
"We have not submitted any revival plan yet, but we will present it soon. No time-frame has been specified," he said when asked when the airline planned to submit a revival plan as well as seek revocation of suspension of its flying license (Scheduled Operator's Permit) by the DGCA," he added.
Kingfisher's licence was issued on August 26, 2003, and is valid till December 31 this year. It was suspended by the DGCA on October 20, 2012, after Kingfisher failed to submit a plan in a stipulated 15 days.
DGCA sources said Mr Aggarwal had told the regulator that he would discuss an operational and financial plan for reviving the cash-strapped carrier with Kingfisher promoter Vijay Mallya. This will include the number of aircraft they have, the routes they want to operate on, apart from the financial issues including debt repayment, the sources said, adding that they would have to submit a comprehensive plan on all these issues to convince the DGCA to revoke the suspension of their flying permit.
About 17 banks, led by State Bank of India (SBI), have an exposure of Rs. 7,500 crore to the debt-ridden airline. At Rs. 1,500 crore, SBI has the maximum exposure.
The lenders together hold around a 23 per cent stake in the airline since March, after the banks converted their Rs. 6,500 crore of recast debt (after a corporate debt restructuring, or CDR, in November 2010) into equity.
The Mallya-owned airline and its promoters have most of their shares and assets pledged with banks, including the brand Kingfisher (pledged for a value of Rs. 4,100 crore) and two of its properties -- the Kingfisher Villa in Goa and the Kingfisher House in Mumbai, together valued at around Rs. 200 crore.
However, sources say the properties will fetch just about Rs. 150 crore of the Rs. 7,500 crore debt as its brand valuation has deteriorated. Bankers also have the option of invoking guarantees by the UB Group as well as a personal guarantee by Mr Mallya.
Kingfisher employees resumed work yesterday after a 27-day strike and a 25-day lockout was lifted by the management after it agreed to pay by four months' salary dues in a staggered manner by December-end.
The striking employees had earlier stepped up the heat demanding an immediate settlement while threatening to take their protest to the upcoming Formula One Grand Prix in which airline promoter Mallya is involved.
"We will now finalize and present our resumption plan to the DGCA and hope to get their concurrence soon," a Kingfisher spokesperson said.
The carrier, which early last year had a fleet of 66 aircraft, now has ten -- seven Airbus A-320s and three ATR turbo-props. It is saddled with a loss of Rs 8,000 crore and a debt burden of another over Rs 7,524 crore, a large part of which has not been serviced for several months.
(With inputs from agencies)
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