'No objection' to KFA, but DGCA unconvinced

Oil companies and a few aircraft leasing companies have given Kingfisher Airlinesa ‘no objection certificate’ to restart operations, said a senior Directorate General of Civil Aviation ( DGCA) official. The DGCA, however, is unconvinced of Kingfisher’s plan to start operations this summer.

Today, Kingfisher chief executive Sanjay Agarwal met the director general of civil aviation and apprised him of the situation regarding the interim revival plan it had given in December. A senior DGCA official said, “There is no proof of the funding of Rs 652 crore from the UB Group. There has been no NOC (no-objection certificate) from airport operators and no commitment from KFA (Kingfisher Airlines) about the payment of salaries to employees.”

Agarwal is understood to have told DGCA Kingfisher was ready to restart operations this summer.

Today, the Kingfisher Airlines stock closed at Rs 14.30 on the BSE, a rise of 1.63 per cent over the previous close.

The airline owes Rs 250 crore to the Airports Authority of India. Kingfisher claimed there were no dues to oil companies, except interest payments to Hindustan Petroleum.

In December, the airline had given DGCA a plan for limited resumption of its operations. According to the plan, Rs 652 crore would be provided by the UB Group (of which the airline is a part) over 12 months, as banks were unwilling to extend more credit to the company.

The plan added operations were to be restarted on a cash-and-carry basis with airport operators and oil companies. The Rs 652-crore funding by the UB Group would be used to pay the Rs 120-crore salary dues, as well as for daily operations and the refurbishment of aircraft.

According to the plan, the airline would restart operations with five Airbus and two ATR turboprop aircraft. The fleet could be increased to 11 ATRs and 10 Airbus planes within 10 weeks, DGCA sources said.

For about two years, the carrier, controlled by liquor tycoon Vijay Mallya, has been seeking cash infusion. Earlier, Mallya had said the airline was in talks with Gulf carrier Etihad Airways.

Kingfisher has two years to give a revival plan, get its suspension revoked and restart operations.

http://www.business-standard.com/india/news/no-objection-to-kfadgca-unconvinced/499071/