MUMBAI | NEW DELHI: DVB Bank, the world's
largest aircraft financier, has filed a case against the country's aviation
regulator for delayed deregistration of twoKingfisher
AirlinesBSE -4.26 % aircraft, accusing the Indian administration of helping Vijay Mallya, the bankrupt
airline's billionaire owner.
The German firm has also vowed to suspend all funding to Indian carriers casting doubts over future purchase programmes of airlines such as Indi-Go and Jet Airways.
The two Kingfisher aircraft in question are now located in Turkey and under the possession of DVB, but the hapless German bank is finding it impossible to deregister the aircraft from India and proceed with its sale. DVB took possession of the aircraft when it landed in Turkey in August for regular maintenance.
"The Indian administration is certainly helping Mallya by not deregistering aircraft," said Carsten Gerlach, senior vice-president, aviation finance, at DVB.
The case will come up for hearing on April 8, 2013, said Ajai Achuthan of Desai & Diwanji, a law firm based in Mumbai. DVB's writ petition is against DGCA and Kingfisher Airlines for not de-registering the two aircraft.
DVB's move may act as a red rag for other lenders to Indian companies, but may not have a shortterm impact as most aircraft orders placed by domestic airlines are bunched together for delivery from 2015 onwards. For instance, in January 2011, budget carrier IndiGo created history by ordering 180 Airbus A-320 NEOs with a list price of almost $16 billion (Rs 72,000 crore) to be delivered between 2016 and 2025. However, IndiGo is still taking delivery of the 100 A-320s worth $6 billion, which it ordered in 2005.
The Wadia group promoted GoAir has ordered 72 Airbus 320 NEO aircraft in June this year.
The deliveries will begin from 2015, with an induction rate of 15 aircraft per year. Jet AirwaysBSE -1.15 % has ordered 10 B-787 to be delivered starting 2014. In October, the Centre for Asia-Pacific Aviation (CAPA) said that Chennai-headquartered low-cost airline SpiceJetBSE 0.96 % is in advanced discussions to order 30-40Boeing 737 MAX aircraft.
Air India has placed orders for 27 Dreamliners, delayed by 4 years, for which delivery has already started, but the financing has been tied up.
DVB is one of the largest providers of recourse and limited-recourse debt (senior and junior) to passenger/cargo airlines and aircraft operating lessors worldwide.
It has funded 900 aircraft all over the world, and in India, the bank has, in the past, done "significant financing" for Jet Airways, Indi-Go, Air India and SpiceJet in addition to Kingfisher aircraft. In some cases, DVB has done indirect financing for Indian airline companies.
Selling the two Airbus 320s of 2006 vintage could help DVB recover $23.5 million each. "It is a totally unnecessary situation," rues Gerlach. "We cannot work on this aircraft for maintenance or certify this aircraft and carry out modification for the prospective new owners of the aircraft." Deregistration is compulsory requirement to carry out such acts.
The German firm has also vowed to suspend all funding to Indian carriers casting doubts over future purchase programmes of airlines such as Indi-Go and Jet Airways.
The two Kingfisher aircraft in question are now located in Turkey and under the possession of DVB, but the hapless German bank is finding it impossible to deregister the aircraft from India and proceed with its sale. DVB took possession of the aircraft when it landed in Turkey in August for regular maintenance.
"The Indian administration is certainly helping Mallya by not deregistering aircraft," said Carsten Gerlach, senior vice-president, aviation finance, at DVB.
The case will come up for hearing on April 8, 2013, said Ajai Achuthan of Desai & Diwanji, a law firm based in Mumbai. DVB's writ petition is against DGCA and Kingfisher Airlines for not de-registering the two aircraft.
DVB's move may act as a red rag for other lenders to Indian companies, but may not have a shortterm impact as most aircraft orders placed by domestic airlines are bunched together for delivery from 2015 onwards. For instance, in January 2011, budget carrier IndiGo created history by ordering 180 Airbus A-320 NEOs with a list price of almost $16 billion (Rs 72,000 crore) to be delivered between 2016 and 2025. However, IndiGo is still taking delivery of the 100 A-320s worth $6 billion, which it ordered in 2005.
The Wadia group promoted GoAir has ordered 72 Airbus 320 NEO aircraft in June this year.
The deliveries will begin from 2015, with an induction rate of 15 aircraft per year. Jet AirwaysBSE -1.15 % has ordered 10 B-787 to be delivered starting 2014. In October, the Centre for Asia-Pacific Aviation (CAPA) said that Chennai-headquartered low-cost airline SpiceJetBSE 0.96 % is in advanced discussions to order 30-40Boeing 737 MAX aircraft.
Air India has placed orders for 27 Dreamliners, delayed by 4 years, for which delivery has already started, but the financing has been tied up.
DVB is one of the largest providers of recourse and limited-recourse debt (senior and junior) to passenger/cargo airlines and aircraft operating lessors worldwide.
It has funded 900 aircraft all over the world, and in India, the bank has, in the past, done "significant financing" for Jet Airways, Indi-Go, Air India and SpiceJet in addition to Kingfisher aircraft. In some cases, DVB has done indirect financing for Indian airline companies.
Selling the two Airbus 320s of 2006 vintage could help DVB recover $23.5 million each. "It is a totally unnecessary situation," rues Gerlach. "We cannot work on this aircraft for maintenance or certify this aircraft and carry out modification for the prospective new owners of the aircraft." Deregistration is compulsory requirement to carry out such acts.
The
Director General of Civil Aviation (DGCA) has been going slow on their
application causing enormous loss. Gerlach has visited DGCA office twice and even met the civil
aviation secretary, he says. Gerlach had approached DGCA on August 23, 2012 and
later followed it up with another meeting on September 20.
DVB is represented Desai & Diwanji, a reputed solicitor firm. A writ petition against the DGCA was filed on December 3. DGCA, in its defence, says that it will go by the law of the land. "We don't have any problems in deregistering an aircraft. We did so even in the case of Paramount. But we can't take a decision regarding a company which has gone to court as it can influence the outcome of litigation. We have to go by the law," said Arun Mishra, the DGCA chief.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/dvb-bank-worlds-largest-aircraft-financier-drags-dgca-to-court/articleshow/17685507.cms?curpg=2DVB is represented Desai & Diwanji, a reputed solicitor firm. A writ petition against the DGCA was filed on December 3. DGCA, in its defence, says that it will go by the law of the land. "We don't have any problems in deregistering an aircraft. We did so even in the case of Paramount. But we can't take a decision regarding a company which has gone to court as it can influence the outcome of litigation. We have to go by the law," said Arun Mishra, the DGCA chief.
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