GMR seeks over $ 800m; Maldives insists on forensic audit

Indian infrastructure firm GMR will seek a compensation of over USD 800 million from Maldives for the termination of its airport deal here but Male is insisting on a “forensic audit” as it feels the actual amount would be less than half.

“We have sent a letter to the Maldivian Government indicating a number of more than $800 million as compensation amount. This is our initial estimate. The final figure would be based upon various calculations, loss of profit among others,” GMR (Airports) CFO Sidharath Kapur said.

The Maldivian Government, however, debunked the calculations and insisted on getting a forensic audit done through an international firm.

“We will go in for a forensic audit as we want to see how much money has poured in to GMR coffers through the Male International Airport and how much actual money has been spent here. As per our information, GMR has cashed in only $150 million of the about $350 loan it had bagged through a bank,” Maldives President Mohamed Waheed’s press secretary Masood Imad said.

Asked if GMR is open to a forensic audit, Kapur told PTI, “Our books are transparent. The concession agreement signed with Maldives Government did not have the clause of forensic audit. Having said that, I must add that we don’t have any objection to an audit but it has to come through proper legal process”.

Sources in the Maldivian Government say that the compensation amount, as per their calculations, should come to about a lower limit of $150 million and an upper limit of $350 million.

“We will present our case before the Singapore Court and let them take the call,” a source said.

The $500 million airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was “unilaterally” terminated by the current Government on November

27.The airport was taken over by the Maldives AirportsCompany Limited after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.

However, the Singapore Supreme Court ruled on November 6, a day before the notice period expired, that Maldives has the power to take over the airport on November 6.

Replying to a query if GMR is not welcome in Maldives anymore, Masood said, “We don’t have anything against GMR. We had objection to the contract that was signed under dubious conditions. We will in the future initiate a lot of infrastructure projects and GMR is welcome to bid for it.”

However, sources in the know said that the “unlawful” termination of the contract sends a “negative signal” to foreign investors, a stand taken by Indian government too.

“It now feels that any contract signed with a particular regime can be scrapped when a new government comes in. It is a risky proposition,” a source said.

Asked if Maldives will seek fresh bids for the modernisation and the operations of the airport, Imad said the cabinet has given the nod to set up a new company called Maldives International Airport Limited that will takeover from MACL. However, he added the structure of MIAL is yet to be finalised.

Refuting the allegations that the move to terminate the contract was a political one to whip up emotions before the elections next year, Imad said, “Protests against the contract have been taking place since the first day it was signed by Nasheed. There were regular protests and marches happening”.

He added, “We had a set of issues that needed to be looked into after we came to power. We are tackling them one by one and airport issue was one of them. We consulted reputed international law firms and they agreed with us that the contract was not valid. It is only then we terminated”.

“The President has not even said if he might or might not run for Presidency. It is completely wrong to say that it was done for political mileage. We are only setting the wrong done by Nasheed right,” he added.  PTI

Lenders meet Mallya, KFA brass today

Top bank executives unlikely to attend, with decisive outcome not expected hope for more clarity on action plan

Lenders to Kingfisher Airlines (KFA) will meet its promoter, Vijay Mallya, and the rest of the brass tomorrow, to chart a way forward for the grounded airline. While the bankers hope the management comes with a clear plan of action for the debt-laden carrier, chances of the meeting being decisive are slim.

Fund infusion plans will top the agenda. The company management is expected to make a presentation on the issues between it and the aviation regulator, and on its detailed business plans.

An executive with a public sector bank(PSB) based here said only middle-level executives from banks would attend. Top bank officials would meet separately at a later date, based on what happens tomorrow.

There have been a series of meetings between banks and the company management but without much headway. The lenders have said they might start the recovery process if Mallya fails to give a clear plan of action. However, the banks don’t have enough collateral to initiate the process; the collateral KFA has given is just a fraction of the total debt of about Rs 7,500 crore.

The head of another bank said there was very little hope of revival with the current management of Kingfisher. Only the induction of a strong airline as a new partner, which would pump in money and take control over a period, might give hope for some recovery. Kingfisher has said it was in talks for selling stake toEtihad, the national airline of the United Arab Emirates.

Pratip Chaudhuri, chairman of State Bank of India (SBI), had said the airline needed infusion of at least $1 billion (Rs 5,500 crore) to make it fly again. Kingfisher has been grounded since October, following a strike of its engineers. Later, on October 20, the Directorate General of Civil Aviation suspended its flying permit.

It was almost a year earlier when most lenders declared their loans to the airline as non-performing assets (NPAs). Till then, the loans were treated as sub-standard loans, for which banks were required to make 15-20 per cent provision. With no sign of revival and repayment, the account could slip into the doubtful category, adding to the provisioning from January 2013. Many banks have already made extra provisions.

Indian Overseas Bank is the only bank still treating its exposure to Kingfisher as standard asset. With payments due for more than 90 days, the bank will declare it an NPA in the third quarter.

The credit head at a large south-based PSB said with the lack of assets in the company, the banking regulator might even ask for 100 per cent provisioning.

http://www.business-standard.com/india/news/lenders-meet-mallya-kfa-brass-today/495823/

Sky war: Neo versus Max

Airbus and Boeing are now fighting a bitter battle over fuel-efficient planes

The battle for the skies is moving to a new orbit – fuel efficient narrow body planes. While Airbus has cashed in on the first mover advantage in this space with its A320 Neo (full form for New Engine Option) bagging orders for 1579 planes across the globe, Boeing, which launched its plane in August last year, is catching up fast with nearly 1,000 orders for the 737 Max.

In India, however, the European plane maker is far ahead in the race with a host of airlines warming up to its sales pitch of Neos saving roughly 15 per cent on fuel costs. That’s substantial considering that fuel cost accounts for more than 50 per cent of the expenditure of an airline like GoAir, says the airline’s CEO Giorgio De Roni. GoAir has placed order for 72 A320Neos, while IndiGo has gone in for 150 of them.

In comparison, Boeing Max is yet to book any order for its fuel-efficient Max from any airline in India. But that may be only a lull before the storm. Kapil Kaul of Centre for Asia Pacific Aviation says the potential size for the narrow body market in India in the medium term is 500 planes (including 250 ordered by GoAir and IndiGo). “Airbus had almost a nine-month head start with its Neo. But we expect Boeing to announce orders for the 737Max in the next few months,” he says.

Both Jet Airways and SpiceJet are evaluating the Neo as well as the Max, and Kaul expects the airlines to order 130-150 planes and choose between Airbus and Boeing. “It is critical for Jet Airways and SpiceJet to make commitment for new aircraft. Air India has significantly under- invested in their narrow body fleet and needs to address this for it to stay relevant,” Kaul says.

Other airlines in emerging countries have also welcomed Neo with open arms. Last Friday, Malaysian low-cost carrier Air Asia announced a $9.4 billion order for 100 airbus A320 including 64 A320 Neos, making it the largest customer for Airbus. The order is a big boost for Airbus as it can end the year with a happier note despite losing the race for over all orders to Boeing in 2012. The A320 Neo’s first flight is on track for the fourth quarter of 2014.

But Boeing isn’t too perturbed by the Neo’s early flight. “We have outsold Airbus this year. Airbus launched its A-340 plane before the Boeing 777, but now they have stopped producing the A340 while Boeing 777 is still selling,” explains Boeing’s senior vice president (sales) Dinesh Keskar. “Max has better fuel efficiency than the Neo with more seats in an all economy configuration,” he adds.

The battle has spilled over to ad campaigns as well. Last month, Airbus started a campaign after Boeing ran ads with specific claims about the superiority of Max over the Neo. While Airbus said it placed ads only after Boeing failed to respond, Boeing said it was confident in its performance claims.

Both Airbus and Boeing are pitching their planes for fuel efficiency besides bringing advantages like reduced emissions and increase the payload and range. “Airlines will benefit from a seven per cent advantage in operating costs over future competing airplanes (A320 Neo) as a result of optimised engines, more efficient structural design and lower maintenance requirements,” Boeing said while launching the 737 Max.

Similarly, Airbus is promising its customers fuel savings of up to 15 percent with the Neo. Airbus estimates a market potential of 4,000 A320 Neo family aircraft over the next 15 years.

While the brand war is on, the fact is neither Neo nor Max will be an all-new aircraft built from scratch; instead it will be an upgraded version of the planes, with a choice of new, advanced engines which will offer big savings in fuel consumption. Both are promoting the new brands as examples of frugal innovation.

Last week, Airbus secured certification from the European Aviation Safety Agency for sharklets – the first phase of a gradual evolution to Neo. Air Asia will be the first airline to receive Airbus A320 planes with sharklets by the year-end, while GoAir and IndiGo will receive sharklet-fitted planes in 2013.

“The certification of Airbus’ sharklets is a milestone that paves the way for airlines to benefit from savings in fuel,” says Tom Williams, executive vice president at Airbus. The annual greenhouse gas emission reduction per aircraft equipped with sharklets will be approximately 1,000 tonnes of CO2 – that’s equivalent to taking 200 cars off the roads.

“Fuel consumption is related to many parameters, including the stage length (flight duration). Our average flight lasts slightly less than two hours and we expect 2 per cent fuel efficiency due to sharklets,” GoAir’s De Roni says.

Airbus ad targets Boeing
Last month, Airbus released advertisements accusing Boeing of “stretching the truth” to promote its planes. The advertisement shows a Boeing plane with an elongated nose like fictional character Pinnochio. “They crossed a line when they started running specific numbers,” Airbus sales chief John Leahy says in an interview with Bloomberg News. “They've blatantly misrepresented the facts,”  he says. Boeing denied the claim saying there was nothing wrong in its promotions.

http://www.business-standard.com/india/news/sky-war-neo-versus-max/495794/

Malaysia to stick with GMR despite Male setback

HYDERABAD: Malaysia will press ahead with its alliance with the GMR group notwithstanding the setback to the Indo-Malaysian joint venture airport project in Maldives, the southeast Asian nation's trade and industry minister said. 

Mustapa Mohamad told reporters on Saturday that Malaysia is "pleased" with its partnership with GMR in developing two airports in India (Delhi and Hyderabad)) and the Sabiha Gokcen International Airport in Istanbul, Turkey. Many countries in Central Asia have ambitious plans to expand their airports and Malaysia will actively pursue these opportunities with GMR, he said. 

"We are very disappointed that the (airport) contract was terminated by Male. We hope this is not going to prevent Malaysian Airports and GMR to go to other countries in future." 

Malaysian Airlines, too, has joined hands with GMR to set up a maintenance, repair and overhaul centre at Hyderabad airport. 

GMR InfrastructureBSE 0.82 % and government-owned Malaysia Airports Holdings modernised the Ibrahim Nasir International Airport in the Maldivian capital Male. The joint venture, owned 77% by GMR Infrastructure, was on December 8 ordered to relinquish the airport tothe Maldives government after a change of regime in the archipelago in February. The airport company's decision to impose a fee of $25 ( 1,360) on every departing passenger was the major bone of contention before the government of President Mohammed Waheed decided to order the consortium out of the country. 

The joint venture, whose investment of over $500 million was the biggest foreign project in the archipelago nation, is contemplating seeking compensation of over $800 million from the government. 

"We would like the Malaysian companies to be protected because there was a legitimate contract signed between Male airport and GMR-Malaysian Airports. We sign investment guarantee agreements to protect theinvestments of Malaysian entities overseas with some countries. This includes compensation in the event of nationalisation or whatever actions taken by the countries overseas. We hope to get adequate compensation," the minister said. 

Citra Devi Ramiyah, Malaysia's Consul General in Chennai, said the dispute over Male airport and consequent compensation claims would be discussed at the meeting of the Malaysian Prime Minister Najib Tun Razakwith Prime Minister Manmohan Singh next week. "The Male government is willing to compensate. But it has not gone for full discussions and negotiations. The heads of governments (Malaysia and India) are going to meet in Delhi next week. There may be some decisions there," she said.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/malaysia-to-stick-with-gmr-despite-male-setback/articleshow/17644177.cms

GMR seeks compensation of $800 m from Maldives

New Delhi, 17 December (Asiantribune.com)

Indian infrastructure firm GMR will seek a compensation of over $800 million from Maldives for the termination of its airport deal here but Male is insisting on a “forensic audit” as it feels the actual amount would be less than half.

“We have sent a letter to the Maldivian government indicating a number of more than $800 million as compensation amount. This is our initial estimate. The final figure would be based upon various calculations, loss of profit among others,” GMR (Airports) CFO Sidharath Kapur said.

The Maldivian government, however, debunked the calculations and insisted on getting a forensic audit done through an international firm. “We will go in for a forensic audit as we want to see how much money has poured in to GMR coffers through the Male International Airport and how much actual money has been spent here. As per our information, GMR has cashed in only $150 million of the about $350 loan it had bagged through a bank,” Maldives President Mohamed Waheed’s press secretary Masood Imad said.

Asked if GMR is open to a forensic audit, Kapur told PTI, “Our books are transparent. The concession agreement signed with Maldives government did not have the clause of forensic audit. Having said that, I must add that we don’t have any objection to an audit but it has to come through proper legal process”.

Sources in the Maldivian government say that the compensation amount, as per their calculations, should come to about a lower limit of $150 million and an upper limit of $350 million. “We will present our case before the Singapore Court and let them take the call,” a source said.

The $500 million airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was “unilaterally” terminated by the current government on November 27. The airport was taken over by the Maldives Airports Company Limited after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.

Replying to a query if GMR is not welcome in Maldives any more, Masood said, “We don’t have anything against GMR. We had objection to the contract that was signed under dubious conditions. We will in the future initiate a lot of infrastructure projects and GMR is welcome to bid for it.”

Refuting the allegations that the move to terminate the contract was a political one to whip up emotions before the elections next year, Imad said, “Protests against the contract have been taking place since the first day it was signed by Nasheed. There were regular protests and marches happening“.

http://www.asiantribune.com/news/2012/12/16/gmr-seeks-compensation-800-m-maldives

Kingfisher Airlines’ lenders hope Mallya will come up with revival plan

Bank consortium to decide future course of action tomorrow

NEW DELHI, DEC. 15: 

Lenders’ to the beleaguered Kingfisher Airlines’ (KFA) are pinning their hopes on the private carrier’s promoter Vijay Mallya coming up with a concrete revival plan for the airline on Monday.

Monday’s meeting of the 17-bank consortium with Vijay Mallya assumes significance as it comes in the backdrop of reports that Abu Dhabi carrier Etihad and KFA promoters have renewed their deal talks.

KFA is expected to make a presentation on the concrete revival plan, if any, formulated as required by the Directorate General of Civil Association (DGCA) or the lenders, banking industry sources said.

In case there is no concrete revival plan, then the lenders will decide on their future course of action on the KFA account on the same day itself, they added.

So far, the public sector lenders, who have an exposure of Rs 7,000 crore, have not initiated any action to recover their dues.

For most banks in the consortium, Kingfisher Airlines is a non performing account.

Also on the agenda of Monday’s meeting at Mumbai are discussions on the SBI Caps report, besides the Knight Frank’s valuation report of Kingfisher Villa at Goa, sources said.

The meeting will also discuss the progress on the settlement of dues to the Airport Authority of India, oil companies, aircraft lessors, Income tax and service tax authorities.

The Government had recently changed the foreign investment norms so as to allow foreign carriers to have up to 49 percent holding in the equity of domestic airlines.

An earlier attempt to restructure Kingfisher Airlines through corporate debt restructuring (CDR) mechanism had failed.

The attempt failed as the promoter could not bring in the desired equity funds for the package to sail through.

Banks will be required to mount another restructuring exercise through CDR cell if the promoter’s new proposition, if any, is acceptable to them, sources said.

With Kingfisher Airlines grounded, the brand value of the airline has also taken a hit. It is unlikely that any sizeable amount would get salvaged if bankers were to initiate recovery action today, sources said.

Kingfisher Airlines’ brand was the main collateral that was used for obtaining working capital funding for the private carrier.

http://www.thehindubusinessline.com/companies/kingfisher-airlines-lenders-hope-mallya-will-come-up-with-revival-plan/article4203880.ece?ref=wl_opinion

3 carriers keen to fly in to revamped Kolkata terminal: AAI

Kolkata, Dec 15:  

At least three global airlines have evinced interest in launching flight services to and from a modernised Kolkata airport. The modernised terminal of the Netaji Subhas Chandra Bose International Airport is scheduled to open on January 23.

Japan Airlines, Turkish Airlines and low-cost carrier Fly Dubai have been in talks with the Union Government in Delhi, according to B. P. Sharma, Regional Director, Airports Authority of India (AAI).

“While Fly Dubai has formally approached the government, talks have been on with the other two international carriers,” Sharma told Business Line.

He, however, pointed out that the AAI did not receive any “concrete” intimation from Turkish Airlines.

Turkish Air had reportedly evinced interest to increase the number of flights between the two countries and add new destinations, including Kolkata.

Sharma pointed out that JAL and Fly Dubai have been discussing with the Union Government on technical grounds regarding their flight services connecting Kolkata. If Japan Airlines introduces its service at Kolkata, the carrier will make a comeback to the city after almost four decades. It withdrew its operations from Kolkata in early 1970s.

Dragonair, a sister airline of Cathay pacific Airways, last month started a direct flight service between Kolkata and Hong Kong. It will soon move its operations to the modernised facility. According to sources, IndiGo would soon begin its international flights to Bangkok from Kolkata.

http://www.thehindubusinessline.com/todays-paper/tp-economy/3-carriers-keen-to-fly-in-to-revamped-kolkata-terminal-aai/article4204273.ece

New terminal at CIAL soon

Kochi, Dec. 16:  

A modern international terminal at the Cochin International Airport Ltd (CIAL) will soon become a reality. The Rs 450-crore terminal will be able to handle about 4,000 incoming and outgoing passengers during peak hours.

The State Excise Minister, K. Babu, unveiled the new terminal’s design based on Kerala’s temple architecture at a function at the airport.

Speaking to reporters, V.J. Kurien, Managing Director, CIAL, said the tendering process for the facility would commence in January. The facility will have a built up area of over 15 lakh square feet to handle about 10 million passengers each year.

The new terminal will cater to the passenger traffic demand up to 2025. The terminal will have 15 parking bays with full aerobridge connectivity.

http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/new-terminal-at-cial-soon/article4207278.ece