Tuesday 19 February 2013

Boeing seeks temporary fix for suspect batteries: report


US aerospace giant Boeing is considering an interim plan to protect its 787 Dreamliner if its batteries overheat or catch fire, according to a report Monday in the Seattle Times.

 

Boeing’s flagship new jet has been banned from flight worldwide since the middle of last month after battery smoke forced an emergency landing of one plane and a battery fire was reported on a parked jet.

 

The company has stood by the safety of the lithium-ion batteries used in the plane, pending the results of an official investigation, but Monday’s report said that the company was looking for a temporary solution.

 According to the daily, which covers a region including a major Boeing plant, Boeing may encase the battery cells in a titanium or steel box fitted with a high pressure vent to contain any fire that erupts in flight.

 

The US Federal Aviation Authority (FAA) refused to comment on the report, which the paper said came from people familiar with the plan. Boeing said the report was speculative and contained unspecified errors.

 

The Dreamliner, a long-haul fuel-efficient airliner built using the latest composite materials, is key to Boeing’s business strategy as it battles to be top dog in the virtual duopoly it shares with rival Airbus.

 

Airbus insiders have told AFP that the European giant has dropped plans to use lithium-ion batteries in its future 787 rival, the A350.

 

According to the reports, Boeing hopes its interim plan to shield the plane from battery fires will convince US safety authorities to allow the 50 jets grounded around the world to return to service by May at the earliest. US aerospace giant Boeing is considering an interim plan to protect its 787 Dreamliner if its batteries overheat or catch fire, according to a report Monday in the Seattle Times.

 

Boeing’s flagship new jet has been banned from flight worldwide since the middle of last month after battery smoke forced an emergency landing of one plane and a battery fire was reported on a parked jet.

 

The company has stood by the safety of the lithium-ion batteries used in the plane, pending the results of an official investigation, but Monday’s report said that the company was looking for a temporary solution.

 According to the daily, which covers a region including a major Boeing plant, Boeing may encase the battery cells in a titanium or steel box fitted with a high pressure vent to contain any fire that erupts in flight.

 

The US Federal Aviation Authority (FAA) refused to comment on the report, which the paper said came from people familiar with the plan. Boeing said the report was speculative and contained unspecified errors.

 

The Dreamliner, a long-haul fuel-efficient airliner built using the latest composite materials, is key to Boeing’s business strategy as it battles to be top dog in the virtual duopoly it shares with rival Airbus.

 

Airbus insiders have told AFP that the European giant has dropped plans to use lithium-ion batteries in its future 787 rival, the A350.

 

According to the reports, Boeing hopes its interim plan to shield the plane from battery fires will convince US safety authorities to allow the 50 jets grounded around the world to return to service by May at the earliest.

http://www.rawstory.com/rs/2013/02/18/boeing-seeks-temporary-fix-for-suspect-batteries-report/

 

 

Mallya surprises KFA staff with month's salary, CEO meets DGCA


A week after its lenders decided to recover their dues, cash-strapped Kingfisher Airlines has started paying salaries to its employees apart from approaching the aviation regulator seeking licence renewal, sources said today.

 

"Some of us have received salary dues. Those in the lowest package as well as some engineers and pilots have also a month's salary dues," sources told PTI.

 

The airline has not been paying salary to its employees since May last year, while it had started delaying salaries much before the crisis broke out last October. The sources also said airline Chief Executive Sanjay Agarwal is in the capital to meet the Directorate General of Civil Aviation (DGCA) to make a fresh request to resume operations. However, both the developments could not be officially confirmed.

 

Earlier in the day, Kingfisher shares rose as much as 5 per cent on the BSE, the maximum permissible limit on a day, after one of its promoters, United Breweries Holdings, hiked its loan limit for the ailing carrier to Rs 750 crore from Rs 300 crore.

 

UB Holdings has sought approval from its shareholders to revise the lending limit for Kingfisher and to authorise its board of directors to take necessary actions in this regard, the company had said yesterday.

 

Reacting to the development, shares of the company touched an intra-day high of Rs 10.53 on the BSE, higher by 5 per cent from its previous closing price at 1230 hours.

 

"To accommodate further lending to Kingfisher if required, it is proposed to realign these limits further by increasing the lending limit to KFA from Rs 300 crore to Rs 750 crore and reducing the investment limit from Rs 1,200 crore to Rs 750 crore, thus maintaining the overall limit of Rs 1,500 crore..," UB Holdings said in a shareholders' notice.

 

The revision was done to facilitate the conversion of loans given to Kingfisher into convertible/no-convertible securities, as required by the debt recast agreement between the airline and a consortium of its lenders.

 

It can also be noted that last Tuesday, the lenders to the airline, which number as many as 17 banks which together had extended Rs 7,000 crore to the company, had resolved to recall their loans to the airline, which had been grounded since October one last, saying more than enough time was given to the management to revive the crippled airline.

 

The lenders consortium leader State Bank, which has an outstanding dud loan of over Rs 1,700 crore, had said as a first step, lenders would monetise the collaterals given to them from other group companies like Mangalore Fertilisers and the flagship United Spirits, in which 54 per cent has been sold to the British spirits major Diageo for around Rs 11,170 crore.

 

However, the UB Group has denied that it had given USL shares as collaterals to the lenders as well as the brand Kingfisher, which also covers its beer business.

The bankers are expecting to recover around Rs 1,000 crore from these securities before the end of this fiscal itself.

 

Yesterday, SBI chairman P Chaudhuri had said in Chennai that he was hopeful of recovering a "good portion of his Rs 1,700 crore dues from the airline."

 

"Of the total dues of Rs 7,000 crore... so far, the approach was to revive the airline. But now we have decided to realise the securities provided by the airline. Our endeavour is to recover the full amount," Choudhuri said.

 

Noting that recovery of dues would be after completing a "complicated, long, legal battle", he said the bank has made provisions to collect Rs 1,650 crore of the Rs 1,700 crore through realisation of securities.

 

The lenders also hope to take only a small haircut from the entire fiasco as they have collaterals worth Rs 6,500 crore from group companies, excluding the brand Kingfisher, which in good times was valued at Rs 4,200 crore.

 

The airline, launched in May 2005 as a gift to Vijay Mallya's son Siddharth on his 18th birthday has never made any profit and today has nearly Rs 18,000 crore which include bank loans, accumulated losses, salary arrears, vendors dues and tax dues among others.

 

http://www.deccanherald.com/content/313199/mallya-surprises-kfa-staff-months.html

 

AirAsia to start Kuala Lumpur-Kolkata daily flights from Feb 25


CHENNAI: Low cost airline AirAsia will offer daily flights connecting Kuala Lumpur and Kolkata with effect from February 25.

 

The airline has been operating three flights connecting Kuala Lumpur and Kolkata on Tuesdays, Thursdays and Saturdays.

 

The new additional flight frequencies include a daily flight connecting the two destinations from February 25, an official release here said.

 

"We are happy to fulfill the increasing demand from our guests, for travel on the Kuala Lumpur-Kolkata route by introducing additional flight frequencies," Air Asia Group, Chief Commercial Officer, Siegtraund Teh said.

 

On an average there is a 80 per cent load factor for the airline's three weekly flights, he added.

 

The airline also introduced a limited period offer of Rs 9,999 with all-in-return fares from Kuala Lumpur to Kolkata till March three, the statement added.

 

Jet Airways sparks airfare war; announces India's biggest sale of airtickets


NEW DELHI: India's second largest carrier Jet AirwaysBSE -0.31 % on Tuesday announced what it termed India's biggest airticket sale of 20 lakh seats at Rs 2250 for travel upto anytime till December 31 this year. Tickets can be booked before February 24.

 

On January 11, Kalanithi Maran-owned airline SpiceJetBSE -0.73 % announced 10 lakh seats on offer at Rs 2,013 for travel between February and April, which could be booked over three days, sparking concern at the aviation regulator DGCA's office who perceived such a practice harmful for financials of airlines, consequently requesting others not to join in.

 

However, to be on top of the war for marketshare, Jet Airways seems to have taken the plunge, offering double the number of seats SpiceJet offered.

 

High airfares throughout 2012 due to grounding of Kingfisher AirlinesBSE 4.94 % caused passengers to opt out of air travel, leading to negative growth in traffic for the first time since 2009.

 

The travel fraternity had predicted that 2013 will be all about exciting offers to stimulate the market.

 

"January to March will be very interesting months as airfares are expected to soften," Sunny Sodi, COO (Corporate Travel) and Senior VP (Air Product) of Yatra.com.

 

"Fares will dip also because some capacity will be added to IndiGo, Air India and Jet that will need to be filled up. 2013 will see exciting offers, new deals and several short-term discounts in our assessment," Sodi added.

 

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/jet-airways-sparks-airfare-war-announces-indias-biggest-sale-of-airtickets/articleshow/18570657.cms

Mallya surprises KFA staff with month's salary


     A week after its lenders decided to recover their dues, cash-strapped Kingfisher Airlines has started paying salaries to its employees, apart from approaching the aviation regulator seeking licence renewal, sources said today. "Some of us have received salary dues. Those in the lowest package, as well as some engineers and pilots, have also got a month's salary dues," sources said.

 

The airline has not been paying salary to its employees since May last year. It had started delaying salaries much before the crisis broke out last October.

 

The sources also said the airline’s Chief Executive Sanjay Agarwal is in New Delhi for a meeting with the Directorate General of Civil Aviation (DGCA) to make a fresh request to resume operations. However, these developments could not be officially confirmed.

 

Earlier in the day, Kingfisher shares rose five per cent on the BSE, the maximum permissible limit on a day, after one of its promoters, United Breweries Holdings, raised its loan limit for the ailing carrier to Rs 750 crore from Rs 300 crore.

 

UB Holdings has sought approval from its shareholders to revise the lending limit for Kingfisher and to authorise its board of directors to take necessary action in this regard, the company had said yesterday.

 

Reacting to the development, shares of the company touched an intra-day high of Rs 10.53 on the BSE, higher by five per cent from its previous closing price at 1230 hours.

 

"To accommodate further lending to Kingfisher, if required, it is proposed to realign these limits further by increasing the lending limit to KFA from Rs 300 crore to Rs 750 crore and reducing the investment limit from Rs 1,200 crore to Rs 750 crore, thus maintaining the overall limit of Rs 1,500 crore," UB Holdings said in a shareholders' notice.

 

The revision was done to facilitate the conversion of loans given to Kingfisher into convertible/non-convertible securities, as required by the debt recast agreement between the airline and a consortium of its lenders.

 

Last Tuesday, the lenders to the airline, which number as many as 17 banks which together had extended Rs 7,000 crore to the company, had resolved to recall their loans to the airline, which had been grounded since October one last, saying more than enough time was given to the management to revive the crippled airline.

 

The lenders’ consortium leader State Bank, which has loan dues of Rs 1,700 crore, had said as a first step, lenders would monetise the collaterals given to them from other group companies like Mangalore Fertilisers and the flagship United Spirits, in which 54 per cent has been sold to the British spirits major, Diageo, for Rs 11,170 crore.

 

However, the UB Group has denied that it had given USL shares as collaterals to the lenders as well as the brand Kingfisher, which also covers its beer business. The bankers are expecting to recover around Rs 1,000 crore from these securities before the end of this fiscal itself.

 

Yesterday, SBI Chairman P Chaudhuri had said in Chennai that he was hopeful of recovering a "good portion of his Rs 1,700 crore dues from the airline."

 

AAI asks airline to pay Rs 390 crore in dues

 Trouble never seems to end for Kingfisher Airlines, with state-run Airports Authority of India today tightening the noose saying it wanted a "firm commitment" from the grounded carrier for clearance of Rs 390 crore worth of dues before it is allowed to fly again.

 

"Our dues are more than Rs 390 crore, inclusive of penal interests. So, we are asking for a firm commitment in that because so far, what they have committed could not be honoured," AAI Chairman V P Aggarwal said in New Delhi. Replying to questions, he said, "Though there is news that they are planning to restart operations, there has not been any concrete proposal to us for dilution of our dues."

 

"So far, the approach was to revive the airline. But now we have decided to realise the securities provided by the airline. Our endeavour is to recover the full amount," Choudhuri said. Noting that recovery of dues would be after completing a "complicated, long, legal battle", he said the bank has made provisions to collect Rs 1,650 crore of the Rs 1,700 crore through realisation of securities.

 

The lenders also hope to take only a small cut from the entire fiasco as they have collaterals worth  Rs 6,500 crore from group companies, excluding the brand Kingfisher, which in good times was valued at Rs 4,200 crore.

Boeing Strike Threat Looms After Tumult on 787 Grounding


 already struggling with the grounding of its 787 Dreamliner, is facing a possible strike by union engineers, threatening even more upheaval as it tries to fix the plane and resume deliveries to customers.

Voting ends tonight for 23,000 engineers and technical workers considering whether to authorize a walkout in their dispute over retirement benefits. Approval would allow the Seattle-based union to call a strike at any time. The Boeing Co. 787 Dreamliner taxis at Reagan National Airport in Arlington, Virginia. Chicago-based Boeing said work will move to less expensive sites outside its Seattle jet-manufacturing and development hub if labor costs keep rising. Photographer: Joshua Roberts/Bloomberg

Boeing Co. employees assemble a 787 Dreamliner jet for Air India at the company's manufacturing facility in Everett, Washington. The clash reflects long-standing differences between the engineers who design Boeing planes and the managers at the helm of the company. Photographer: Ron Wurzer/Boomberg

.Labor strife may undermine the company’s efforts to recover. Union workers are involved in trying to find the source of two battery failures that prompted the 787’s Jan. 16 grounding and potential solutions that could get the plane back in the air. They’re also helping boost jet production to pare a seven-year order backlog and develop upgrades for three models.

“The timing would just be horrible,” Brad Lawrence, chief executive officer of Esterline Technologies Corp., said in an interview. Bellevue, Washington-based Esterline gets about 8.9 percent of its revenue from Boeing, according to data compiled by Bloomberg. “To have your engineers’ union be this disconnected that it would walk out right when your company needs you most, it would just be horrible.”

The clash reflects long-standing differences between engineers who design Boeing planes and managers at the helm of the company. A “big divide” opened after Boeing Chairman Frank Shrontz left as it acquired McDonnell Douglas in 1997 and adopted a new emphasis on cost control and risk reduction, said Wolfgang Demisch, a retired aerospace financial consultant who has followed the industry for 40 years.

Cultural Shift

That merger led to cultural changes that altered the tone of labor relations and played into the Dreamliner development, he said. Alan Mulally, an engineer who headed Boeing’s commercial airlines business, was passed over for the top job in 2005 in favor of James McNerney, a former General Electric Co. star who was then CEO of 3M Co. Mulally went on to lead the revival at Ford Motor Co. and was replaced by Scott Carson, Boeing’s sales chief. Communication between management and engineers suffered, according to accounts over the years from former employees including Jim Albaugh, who succeeded Carson.

Negotiations on the latest contract turned bitter in recent months. Chicago-based Boeing said work will move to less expensive sites outside its Seattle jet-manufacturing and development hub if labor costs keep rising. The company said it’s facing increased competition and needs to pare its growing pension liability so it can invest in new models.

Reward Sought

The Society of Professional Engineering Employees in Aerospace union, or Speea, cites Boeing’s $12.6 billion in profits since 2009. It says engineers deserve to be rewarded as the company has returned cash to shareholders with buybacks and a 15 percent dividend boost in that time period and increased McNerney’s compensation about one-fifth through 2011 to $22.96 million, the most recent figure available.

“It’s too close to call,” said Richard Aboulafia, a consultant with Teal Group in Fairfax, Virginia, who has been in the industry more than 25 years. “I’ve never seen any labor dispute in aerospace with this degree of uncertainty.”

Boeing was founded in 1916 by William Boeing, a Yale University engineering student, and built its success on the innovation of its engineers.

The 787 battery issues and labor strife show an erosion of that traditional strength, said Demisch, the consultant. Company and government investigators still haven’t found the reasons behind last month’s battery failures that caused a fire in one 787 at an airport and forced an emergency landing by another.

‘Just Inadequate’

“The overall performance is just inadequate, and that’s not world-class engineering, which is what Boeing is known for,” Demisch said. “Boeing is heading toward a possible strike of its engineers. That’s suggestive that Boeing’s employee relations also need a re-engineering.”

Boeing’s share price has never recovered from the first of what were eventually seven delays to the Dreamliner’s commercial debut. The stock tumbled 26 percent from the day before the first postponement in October 2007 through today, when it closed at $74.65. That compares with a 2.2 percent decline in the Standard & Poor’s 500 Index.

Any reworking of the Dreamliner would come alongside the development this year of the 787-9, a stretched version due to fly in 2014, and the 737 Max, scheduled to enter airline fleets in 2017. Boeing is also working on a 787-10 variant and the so- called 777X, a revamp of its popular 777 wide-body jet that won’t be ready until at least the end of this decade.

Engineering Needs

“Since the 787 appeared to be out of the woods, and the 777 was put off until the next decade, Chicago likely didn’t think it needed much from engineers,” Aboulafia said of executives at Boeing’s headquarters. “Then that damn 787 battery thing happened. Oops.”

The Dreamliner was conceived in 2003, shortly after Airbus SAS began selling the A380, a superjumbo jet that would steal the 747’s ranking as the world’s largest airliner. Boeing responded by proposing a lightweight, composite plane that would help airlines reduce fuel bills on long-haul routes by as much as 20 percent.

To save costs and reduce risk, Boeing decided to rely on a web of global suppliers to design and build most of the plane. That took some of the emphasis off the company’s own engineers.

The development coincided with McNerney’s entry, Mulally’s departure and Carson’s promotion to replace him. Engineers subsequently complained that management discouraged them from voicing their concerns about technical and safety issues.

Too Quiet

“At times, people were reluctant to share some of the views and thoughts they had,” Albaugh said in a July 2010 interview.

Delays persisted over 3 1/2 years and some customers grew angry. Qatar Airways CEO Akbar al-Baker famously told reporters at the Paris Air Show in 2009 that Boeing was being run by bean counters and lawyers and threatened to cancel his order for 60 Dreamliners.

At that show, the 787 was about two years behind schedule, and Carson promised it would fly within two weeks. Instead, it encountered its fifth delay one week later, after a structural flaw came to light that some engineers had known about for weeks. The 787 finally entered service at the end of 2011.

Carson retired early from Boeing a few months after the 2009 air show and was replaced by Albaugh, an engineer who had been running Boeing’s defense division. He met regularly with engineers and hired an outside consultant to encourage employees to share their opinions and ask for help when they needed it.

Sales Chief

Albaugh lasted less than three years before abruptly announcing his early retirement in June 2012. McNerney replaced him with Ray Conner, who like Carson had been the company’s sales chief.

Conner, who started his career at Boeing as a machinist, was credited with getting machinists to agree to a new contract a year ago. He’s been less successful with engineers, who have been working without a contract since November.

The company’s initial offer was rejected by a vote of 96 percent on Oct. 1. Boeing sweetened its proposal on Jan. 17, offering salary-increase pools of 5 percent a year over a four- year contract, matching the raises in the last wage deal.

Boeing didn’t budge from its plan to switch new employees to a 401(k)-style retirement plan from the pension workers get now. The union calls it a “big poison pill” in an otherwise good contract offer and says it’s concerned that in a few years the pension will be eliminated entirely.

‘Hard Bargaining’

“Hard bargaining is a part of any negotiations and we expected that,” Doug Alder, a Boeing spokesman, wrote in an e- mail. “But at the end of the day, we believe this offer proves just how important engineers are to the company’s success.”

A simple majority of votes would grant the union authorization to call a strike. Speea Executive Director Ray Goforth said that wouldn’t necessarily result in a walkout; it would just give the union time to keep negotiating.

Conner, 57, meanwhile is appealing to engineers’ allegiance to Boeing as it tries to get the Dreamliner flying again.

“As you know we are facing challenges on the 787 program,” he wrote in a Feb. 7 memo to employees represented by Speea, urging them to accept the company’s offer. “It was your innovation, talent and skill that brought the 787 Dreamliner to life. … Now more than ever, we need to deliver on those promises by coming together as one team.”

McNerney said on a Jan. 30 conference call that Boeing will be able to figure out the 787 battery issues without Speea- represented engineers.

That confrontational strategy may alienate engineers further, said industry consultants including Demisch.

Flemingo to foray into duty paid retailing


 Dubai-based duty free retailer Flemingo is looking at getting into duty paid stores at the airports and step up presence in diplomatic supplies business in the country.

 The company is looking at opening stores of travel bags and accessories and coffee bars at the airports where it has concession agreements, said Amit Butani, Vice President, diplomatic division, Flemingo.Flemingo operates its stores in 11 airports including Chennai, Pune, Kolkata, eight seaports and near India-Pakistan border.  Flemingo’s diplomatic division is looking to tap 30 to 40% of duty free market in the country for the needs of diplomatic staff in the country.

 Under this business, the company sells products at its duty free shops to the members of United Nations, World Bank, embassies.

 “There are 145 embassies and 119 consulates in the country, There is a huge demand from diplomatic missions here. We are already seeing good growth in the business,” Butani said.

 The company is providing both online and offline formats to the diplomatic staff in the country, he said.

 Flemingo looks to grow business by 20% in the current financial year on the business of $300 million it made last year

Jet kickstarts Round-II of fare war Jet Airways on


 Tuesday kicked off an air fare battle by announcing it would offer two million tickets at discounted prices — between Rs 2,250 and Rs 3,800, depending on distance. These would be 30-50 per cent cheaper than normal tickets.

 Travel portals say the aggressive offer is for about eight per cent of the total number of seats the airline sells on an average over 10 months. The discount-offer tickets, available for both economy full-service and low-cost arms and valid for travel till December-end, could be booked till February 24. The move would help the airline boost its low passenger load factor (of around 70 per cent) in the lean months of February and March, besides its revenue from each flight, experts say.

 Responding quickly to the move, rivals IndiGo and GoAir also dropped their fares on various routes, though they did not make any formal announcement on this. Their fares on some of the competing routes are even lower than those of Jet (see table).

 Jet’s move comes a few weeks after SpiceJet surprised the market by offering a million seats (for a three-month period) at a rock-bottom fare of Rs 2,013. The airline was able to sell over 700,000 tickets and rake in Rs 160 crore from its three-day sale.

 Yatra.com COO Sharat Dhall says: “As Jet is offering discounted tickets across peak and lean seasons, we believe it will release more seats during the lean season and less in the peak.”

 The fares on offer, however, are substantially lower than what Jet had declared to the government as its lowest. For instance, the basic fare on the lowest bucket for Delhi-Mumbai is Rs 1,630 — around five times higher than the Rs 348 it is offering. After adding airport development fees and fuel charges, the fare difference comes to 40 per cent.

 “We want to stimulate the market. For far too long, we have been passive on price actions and innovation,” said a senior Jet executive. Some passengers complained of difficulty in accessing the airline’s booking engine, but the executive denied any problem with the website. “We will probably be able to sell all seats within 24 hours,” he claimed. However, travel portals say, the lowest fares have already been booked in many of the popular sect
 http://www.business-standard.com/article/companies/jet-kickstarts-round-ii-of-fare-war-113022000069_1.html

UB Group (Holdings) hikes loan limit for Kingfisher

To accommodate further lending to debt-laden Kingfisher Airlines , its group holding firm United Breweries (Holdings) today said it is hiking its loan limit for the ailing carrier from Rs 300 crore to Rs 750 crore.
UB Holdings has sought approval from its shareholders to revise the lending limit for Kingfisher and to authorise its board of directors to take necessary actions in this regard, the company said in a regulatory filing. Shareholders of UB Holdings in September 2008 had approved lending funds to Kingfisher to the tune of a maximum amount of Rs 1,500 crore. Later in 2010, the company got approval of shareholders for a revision within this overall limit, pursuant to which the loans for Kingfisher were capped at Rs 300 crore and investments at Rs 1,200 crore.
The revision was done to facilitate the conversion of loans given to Kingfisher into convertible/no-convertible securities, as required by the debt recast agreement between the airline and a consortium of its lenders. "To accommodate further lending to Kingfisher Airlines if required, it is proposed to realign these limits further by increasing the lending limit to KFA from Rs 300 crore to Rs 750 crore and reducing the investment limit from Rs 1,200 crore to Rs 750 crore, thus maintaining the overall limit of Rs 1,500 crore..." UB Holdings said in a shareholders' notice.
The company further said that its directors recommend passing of this resolution. Shares of UB Holdings today fell by about 4 per cent to Rs 61.05 at BSE, while those of Kingfisher rose by about 5 per cent to Rs 10.03. Banks recently decided to start the process of recalling their loans, totalling over Rs 7,500 crore, after discussions with Kingfisher failed to yield desired results for a mutually agreeable mechanism for revival of the currently-grounded airline.
 http://www.moneycontrol.com/news/business/ub-group-(holdings)-hikes-loan-limit-for-kingfisher_826841.html

Etihad Airways needs to revise Jet deal

Chairman, Sheikh Hamed bin Zayed al-Nahayan ABU DHABI: Etihad Airways needs to revise its deal to buy a stake in India's Jet Airways and it is too soon to say when a final agreement will be struck, the Abu Dhabi airline's chairman told Reuters on Sunday.
 Sheikh Hamed bin Zayed al-Nahayan, speaking on the sidelines of a defence exhibition in the UAE capital, said officials would meet with Indian Trade Minister Anand Sharma to discuss the matter
. http://articles.economictimes.indiatimes.com/2013-02-17/news/37144619_1_etihad-airways-india-s-jet-airways-al-nahayan

Negotiations with KFA have not been fruitful

SBI chairman State Bank of India (SBI) on Monday said negotiations so far with Kingfisher Airlines (KFA) have not been fruitful, and till now the approach has been to try and help the airline to revive. The Bank said it didn't expect more provisioning to the airline, which was grounded on October 1, 2012.

Bank Chairman Pratip Chaudhuri, who was in Chennai on Monday to donate a Tempo Traveller to an NGO, said if support comes from the government it would be nice, but the government, as of now, has said it would only support Air India. It may be noted that a consortium of 17 banks, which have lent about Rs 7,000 crore to the Vijay Mallya-led airline, said they would proceed towards recovering their loans by taking over assets which had been pledged.

“So our exposure to Kingfisher is Rs 1,700 crore, and we have made a provisioning of Rs 1,650 crore. We do not expect more provisioning, but the entire consortium of bank have decided to recall the advance and this means sending a notice to the company saying ‘you please pay back’. Based on assets we hold we should be able to realise a good part of our dues,” said the SBI Chairman.

He added it would be a little bit complicated and protracted legal battle unless the company says ‘let us get done with this and let us come to the table for a quick settlement’. Some of the securities are easy to convert into cash. For example, the collateral we hold in the shape of shares of USL or UB group. Real estate or fixed assets take a little longer time to be sold.

Chaudhuri said so far negations had not been fruitful and so far the approach was to try and help the airline revive itself, so that it flies again. But somehow the company has not shown enough energy or result on the ground. So, now the effort is not to restart the airline but to realise the securities.
http://www.business-standard.com/article/finance/negotiations-with-kfa-have-not-been-fruitful-sbi-chairman-113021900046_1.html

Etihad-Jet deal highlights doubt on Indian investment safety

The conclusion of a stake sale agreement between Jet Airways and Etihad Airways is being delayed, as the Abu Dhabi-based airline wants a government assurance on an investment in India.

The demand came after India and the United Arab Emirates had, in principle, agreed on a bilateral investment promotion and protection agreement to boost two-way trade.

Etihad Chairman Hamed bin Zayed al-Nahayan told journalists yesterday the airline needed to revise the proposed deal and it was too soon to say when a final agreement would be signed. The development dragged down Jet’s shares on the Bombay Stock Exchange and these fell 7.7 per cent today, to close at Rs 570.75 each.

Commerce and Industry Minister Anand Sharma and Hamed al-Nahayan (the latter, step-brother of the current UAE president, is also head of the Abu Dhabi Investment Authority, a huge sovereign wealth fund) discussed issues related to trade and investment at a meeting in Abu Dhabi today.

"We talked about the need to have an investment protection agreement. We have in principle agreed for that and it will be expeditiously concluded," Sharma told reporters after the meeting. Adding, "I have assured them that within the limit of our laws, India will protect the investments."

Explained a civil aviation ministry official: "Etihad wants an assurance that it does not meet the same fate as Etisalat.'' Last February, the Abu Dhabi-based telecom company Etisalat had to pull out of India and end the operations of its joint venture in India, following the Supreme Court decision to cancel 121 licences in the spectrum allocation scam.

Etihad is expected to buy a 24 per cent stake in the Naresh Goyal-owned Jet Airways, in a deal valued at Rs 1,600-1,700 crore. An agreement was expected to be signed this week. Asked if a Jet deal would be finalised soon, Hamed al-Nahayan said: "It's too early to decide. We need to talk with the Indians about other issues, including this."

Earlier in the month, the Etihad brass had called on civil aviation minister Ajit Singh and his colleagues, Finance Minister P Chidambaram and commerce minister Anand Sharma, to apprise them about the talks with Jet and interest in the Indian civil aviation market. In a subsequent press conference, Etihad Chief Executive Officer James Hogan said the due diligence findings would be presented to the airline board in a week and it would then decide.

Hogan said the Etihad management met Singh to understand the new foreign direct investment rules and the issues impacting civil aviation in India.

Government-owned Air India, in severe financial trouble, has been raising concerns that the Jet-Etihad deal would weaken it and adversely impact its international business. The airline chairman, Rohit Nandan, had written to civil aviation secretary K N Srivastava in this regard in December 2012. The letter said allowing of investments by foreign airlines would hurt the interests of domestic airlines and prevent Indian airports from developing into international hubs. It added that Jet’s flights to Abu Dhabi could be used to carry passengers from India headed for the US and Europe,

However, minister Ajit Singh had dismissed AI’s concerns, saying the decision to liberalise norms was taken in the interests of the sector and not of any particular airline. Singh also said the government could not impose restrictions or cap Jet Airways’ flights to Abu Dhabi http://www.business-standard.com/article/companies/etihad-jet-deal-highlights-doubt-on-indian-investment-safety-113021900005_1.html.

Jet Airways down 7%; loses Rs. 412 cr Shares of Jet Airways

on Monday tanked more than 7% on bourses on Monday, eroding Rs. 412 crore from its market capitalisation, amid reports that Etihad may revise its deal to buy a stake in the Indian carrier.
According to reports, Etihad Airways Chairman Sheikh Hamed bin Zayed al-Nahayan said the Abu Dhabi-based carrier needs to revise its deal to buy a stake in the Indian carrier and it was too soon to say when a final agreement between the two carriers would be struck.
Reacting to the news, shares of the company opened on a weak note and then lost further ground and touched  intra-day low of Rs. 563.30 on BSE, lower by 8.90% from its last closing price.
At the end of today's trade, the scrip however, gained some lost ground and was trading at Rs. 570.75, down 7.70% from its previous closing price.
In just a single day trading, the company lost a Rs. 412 crore from its market worth. At the end of today's trading, the stock's market capitalisation decreased to Rs. 4,927 crore, from Rs. 5,339 crore in the previous trading session (February 15).
On the National Stock Exchange as well, the stock opened at Rs. 615 and touched intra-day low of Rs. 563.20, down 8.85% from its previous closing price.
At the end of trade, the stock was trading at Rs. 573, down 7.27% from its last closing price.
Etihad is likely to buy 24% equity in Jet Airways valued at about Rs. 1,800 crore. If the deal is carried through, it would be the first investment by a foreign carrier in an Indian airline.
http://www.hindustantimes.com/News-Feed/SectorsAviation/Jet-Airways-down-7-loses-Rs-412-cr-in-M-cap/Article1-1013232.aspx

Jet Air tumbles as Etihad wants change in terms Mumbai, Feb 18

Shares of Jet Airways plunged 7.70 per cent to close at Rs 570.75 on the BSE on Monday on reports that the Abu Dhabi-based Etihad Airways is looking to revise the terms of the deal to buy a stake in the Indian carrier.
According to media reports, the Etihad Chairman Sheikh Hamed bin Zayed al-Nahayan said that it was too soon to say when a final agreement between the two carriers would be struck.
Etihad is governed by a board of directors under the chairmanship of Sheikh Hamed bin Zayed Al Nahyan.
If the deal gets through, this would be the first since India allowed foreign carriers to buy up to 49 per cent in domestic carriers, which are struggling with stiff competition and high operating costs.
Doubled in 10 months
Shares of Jet Airways have nearly doubled in value in the past 10 months to reach a high of Rs 622.10 in January. But in the past three weeks the shares slumped over nine per cent as the companies struggled to seal an agreement.
Aviation analysts say that one of the reasons may be due to Etihad’s interest in seeking 50 per cent board representation in Jet Airways. “The companies will need time for due diligence,” said Sharan Lillaney, aviation analyst, Angel Stock Broking.
In a recent report, the Centre for Asia Pacific Aviation had said Etihad was expected to acquire 24 per cent stake in Jet Airways, which could result in an inflow of $330 million into the Indian airline. The report valued Jet Airways at $1.3-1.4 billion (about Rs 7,000 crore). The current market cap of Jet Airways is about Rs 5,000 crore.
Meanwhile, a PTI report datelined Abu Dhabi quoted Anand Sharma, Commerce and Industry Minister, as saying: “I am given to understand that both the airlines are in negotiations and they are keen to build a partnership.”
http://www.thehindubusinessline.com/markets/stock-markets/jet-air-tumbles-as-etihad-wants-change-in-terms/article4427607.ece?ref=wl_agri-biz

Kingfisher Airlines pays salaries for June to select staff New Delhi, Feb. 18:

The cash-strapped Kingfisher Airlines has started disbursing some staff salaries after a gap of almost two and half months.
Sources told the Business Line that sections of the staff, mainly airport staff, received their salaries for June 2012 on Monday.
The monthly salary outgo for the airline is around Rs 20 crore and its staff members have not been paid regular salaries since June last year.
In November last year the airline cleared some back wages with a promise of settling more wages. This promise was not fulfilled.
The airline has over 4,000 people on its rolls.
Lenders’ move
The decision to make part payment to staff members comes six days after a consortium of lenders led by the State Bank of India (SBI) took an in principle decision to recall the loan given to the airline.
Seventeen banks have an exposure of Rs 7,000 crore to Kingfisher Airlines.
The banks have now said that the matter of Kingfisher Airline’s loan had reached a dead end.
The airline which ceased operations in October last year, reported a loss of Rs 755 crore for the third quarter ended December 31, 2012.
The loss was reported despite the airline not operating a single flight during the period under review.
The Kingfisher stock closed at Rs 10 on the NSE on Monday, up 4.71 per cent from Friday’s close.
http://www.thehindubusinessline.com/industry-and-economy/logistics/kingfisher-airlines-pays-salaries-for-june-to-select-staff/article4428706.ece