Kingfisher Airlines will have to submit a concrete action plan before its flying licence is renewed, official sources said hours before the cash-strapped airline’s operating licence lapsed on Monday evening.
The Directorate General of Civil Aviation suspended Kingfisher’s operating licence on October 20 till such time the airline submits a concrete and viable revival plan ensuring safe, reliable, efficient and sustainable operations. The only silver lining for the airline is that the rules allow for renewal of the lapsed licence within two years or before the end of 2014.
In an attempt to restart operations, the Kingfisher management recently submitted a revival plan, which includes an over Rs 650-crore capital infusion from the parent UB Group over the next 12 months. The need for funds from UB Group has arisen as banks are reluctant to lend any more to the airline.
The DGCA, however, wrote back to the airline seeking more details of the revival plan including an assurance that the funds will be forthcoming from the UB Group. In addition, Kingfisher was asked to consult with various stakeholders who have requested the DGCA not to allow the airline to restart operations till their dues are cleared.
The Airports Authority of India, alone, is owed over Rs 250 crore by the airline. The airline also owes funds to various leasing companies for aircraft leased to operate its flights. Banks have an exposure of about Rs 7,500 crore to the airline.
Kingfisher is saddled with losses of over Rs 8,000 crore. Aviation analysts say the chances of revival for Kingfisher Airlines in the near future are bleak. “The airline needs to pump in at least $200 million. Unless that happens, a revival seems difficult,” said Sharan Lillaney, an aviation analyst, Angel Broking.
The Kingfisher Airlines stock was down 2.3 per cent on the BSE on Monday.