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Ajit Singh, India's civil aviation minister, said on television yesterday that Kingfisher was failing to meet its operational commitments, inconveniencing passengers and causing safety fears. Bloomberg News
Ajit Singh, India's civil aviation minister, said on television yesterday that Kingfisher was failing to meet its operational commitments, inconveniencing passengers and causing safety fears. Bloomberg News

Kingfisher Airline could lose licence to operate

Shares in Kingfisher Airlines fell to an all-time low yesterday after the Indian government threatened to withdraw its operator's licence.

Shares in Kingfisher Airlines fell to an all-time low yesterday after the Indian government threatened to withdraw the carrier's licence to operate.

An announcement that the airline had lost its final remaining independent director and reports that it was about to declare it was cancelling all international flights within the next few weeks also helped to drive the stock down.

Its share price had plunged 12 per cent by yesterday lunchtime but climbed back to close 5.2 per cent down at 19.05 rupees on the Bombay Stock Exchange.

Kingfisher, owned by Vijay Mallya, the billionaire businessman behind the Kingfisher Brewery, has US$1.3 billion (Dh4.77bn) of debt and in the past few weeks has seen its flight schedule shredded by its inability to pay its fuel bills or workforce.

Kotak Securities, a stockbrokerage in Mumbai, said Kingfisher was unlikely to restore operations. "In view of the cash-flow problems being faced by the airline, it is unlikely that the airline would be able to restore operations," the brokerage said in a note to clients.

Ajit Singh, India's civil aviation minister, said on television yesterday that the airline was failing to meet its operational commitments, inconveniencing passengers and causing safety fears.

"The problem is, last two to three months, he [Mr Mallya] has given several plans and he has not adhered to any of them", Mr Singh said. "If passenger safety is compromised we'll not let any airline fly. Safety norms also involves financial viability. If the Directorate General of Civil Aviation [DGCA] gives a report that safety cannot be assured, certainly we will take action. We can cancel their licence if it comes to that."

The DGCA said yesterday that despite several warnings, the airline had not been able to stabilise its position. A revised summer flight schedule had been presented but included the operation of just 15 aircraft, instead of a previously submitted timetable for 28 aircraft.

Mr Mallya was summoned yesterday to meet EK Bharat Bhushan, the DGCA chief, to explain how he plans to revive his airline. Last month, the DGCA served Kingfisher with a show-cause notice on why its licence should not be suspended after days of flight cancellations and its failure to pay employees.

On Monday, the airline said the director Anil Kumar Ganguly had resigned, citing "ill-health over the past few months that prevented him attending normal activities". This latest resignation comes after the former Indian Davis Cup tennis star Vijay Amritraj quit the board. The company had cited an increase in Mr Amritraj's travel schedule for the resignation.

The Times of India and TheEconomic Times quoted a DGCA source as saying: "Most of their explanations are unsatisfactory and they have not given a definite recovery plan.

"The airline not only lacks aircraft, they also lack funds for day-to-day operations. They are failing to meet their flight schedule, causing inconvenience to the passengers and also they failed to give salaries to their employees for past four to five months."

Also, the 15-day mandatory notice period on the show-cause notice has lapsed without Kingfisher giving a valid reason for curtailing its timetable.

Both newspapers also reported that the airline planned to begin suspending its overseas operations, including flights to Dubai, from Sunday, with its Delhi-London service ending on April 9. It was also reported that the airline would return its wide-body Airbus aircraft.

dblack@thenational.ae

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