Germany's DVB Bank SE has sued aviation regulator
Directorate General of Civil Aviation (DGCA) and Kingfisher Airlines to have
two planes it financed for the troubled carrier deregistered, a possible first
step towards recouping its funds.
The case underlines the problems that
The case underlines the problems that
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leasing firms and financing companies face in recovering
grounded planes from Kingfisher, as airports, banks and tax authorities
scramble for the crisis-hit carrier's assets.
International Lease Finance Corp (ILFC) - owned by US insurer AIG - is also struggling to take back Kingfisher planes it owns, one of which, an Airbus A-320, has been impounded by tax authorities for non-payment of dues by the carrier.
The DGCA
must deregister the DVB-financed Airbus planes, now parked in Istanbul, before
the bank can put them to use or lease them out.
"Our
main trouble really is with the DGCA, which should deregister the
aircraft," Carsten Gerlach, senior vice president of aviation finance at
DVB, told Reuters.
"We
have now filed a writ petition at the high court in Delhi against DGCA and also
Kingfisher, strictly focused on deregistration," Gerlach said by phone
from Frankfurt.
However,
the DGCA argues that those aircraft were not financed by DVB alone, so
deregistering them would make the DGCA answerable to other financiers, who are
also trying to recover their money, according to a senior government source
with direct knowledge of the situation.
The DGCA
and Kingfisher did not respond to requests for comment.
Meanwhile,
leasing company IFCL has also asked the DGCA to deregister four
Kingfisher-operated planes, but it faces separate obstacles.
These
planes include an Airbus A-320 parked at Mumbai airport that was impounded by
tax authorities last week after the carrier failed to settle long-pending dues.
"People
just go the airport, see a plane in Kingfisher colours, and stake their claim
on it," the source said, referring to the tax authorities' impounding of
the Airbus.
"What
they don't understand is that the plane may not belong to Kingfisher at
all."
Kingfisher,
owned by flamboyant liquor baron Vijay Mallya, has hit back at the tax
authorities' actions, saying it is illegal for authorities to seize aircraft
that are owned by foreign lessors.
"This
will send a very wrong signal to any foreigner who wishes to do business in the
aviation industry in India," the airline said in a statement last week.
Kingfisher
has 33 scheduled passenger planes registered in India, according to data from
the DGCA. It had a fleet of 64 a year back, when it was India's No. 2 carrier
by market share.
It is
saddled with a combined debt load of $2.5 billion, according to one estimate,
and has not paid salaries for months.
Kingfisher,
which has not flown since October, had its license suspended in October after
months of canceled flights and staff walkouts.
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