India Dispatch: The Indian government is considering suspending or closing down Kingfisher, as it studies what implications such an action will have on markets and banks that have lent substantial amounts of cash to the airline.
Indian government considers cancellation of Kingfisher's licence to fly
The Indian government is looking into the legal implications of cancelling Kingfisher Airlines' licence to fly as the indebted carrier's crisis deepens.
Kingfisher, which has never turned a profit since its launch, has been grounded since the beginning of this month amid labour unrest. Pilots and other workers have complained that they have not been paid for up to seven months.
Ajit Singh, the civil aviation minister, has asked the directorate general of civil aviation to "look into the legal implications" of cancelling or suspending Kingfisher's licence, reported Mint, the Indian business publication, .
The airline has to submit a business plan to the aviation regulator, presenting its case on why its licence should not be cancelled. It has debts of more than $2 billion (Dh7.34bn).
Kingfisher is owned by the Indian alcohol baron Vijay Mallya, who is facing an arrest warrant over four bounced cheques.
The airline posted a loss of 6.51 billion rupees (Dh451.9 million) in the first quarter of this financial year compared with a loss of 2.64bn rupees in the same period a year earlier.
The airline reduced the size of its fleet and cut routes in an effort to turn around the business, shrinking to become the smallest carrier in India from its position as the second-largest airline in the country's domestic aviation market.