Oriental Bank of Commerce (OBC) has asked Airbus Industrie to find buyers for the remaining 24 of the 30 Airbus aircraft ordered by Kingfisher Airlines (KFA) and are pending delivery from the aircraft manufacturer.
Three public sector lenders — Oriental Bank of Commerce, United Bank of India and Corporation Bank — had extended pre-delivery payment (PDP) financing for 30 Airbus aircraft ordered by KFA.
Of this 30 aircraft, for which PDP was extended by three banks, KFA had already taken delivery of six, it is learnt.
Buyer option
“We have already served a notice to Airbus. They had given us an option to take delivery or assign a right to them to find a buyer.
“We have now asked them to find a buyer”, S. L. Bansal, Chairman and Managing Director, OBC, told Business Line on Wednesday. KFA had turned a non-performing account for OBC in the December quarter last year.
PDP financing refers to financing of progress payments that a purchaser makes to a manufacturer while new aircraft are being built.
It is in the nature of advance and does not form part of working capital funding.
No specific collateral
There was no specific collateral obtained directly from KFA, but the funding was extended on the back of a guarantee furnished by the airline manufacturer.
Bansal confirmed that OBC had asked Airbus to find a buyer on behalf of all the three banks that had gone in for PDP financing for KFA.
He pointed out that OBC was not in the airline business and, therefore, not well equipped to take delivery of aircraft and then find a buyer for it to recover its dues arising from KFA account.
The total exposure of these three banks (for KFA aircraft buy) towards PDP financing was Rs 150 crore as on date, Bansal said.
“It is a complex process. But we are working on it,” he said when asked about the recovery of its dues from KFA.
A 17-bank consortium has exposure of about Rs 7,000 crore to the grounded KFA. Most of the funding came in the form of working capital financing.
State Bank of India, which heads the consortium, has begun recovery proceedings and has started offloading certain shares in the market that had been pledged as collateral by the UB Group, owners of KFA.