Kingfisher Planes Deregistered

Wednesday, 24th April 2013 at 10:58am

The doomed Kingfisher Airlines is finally heading to oblivion following the deregistration of 17 of its planes by the Indian government as per request by the airline's lessors.

According to the Director General of Civil Aviation, Arun Mishra, two or three of the deregistered aircraft are under legal dispute with the lessors.

The Director General added that lessors can take back the planes only after they pay parking charges starting on the day of the deregistration. The Indian government removed the planes from the registry two months ago.

International Lease Finance Corp. (ILFC), a unit of American International Group Inc.(AIG), owns the two aircraft which are subject of a legal dispute.

A Kingfisher spokesman refused to comment on the matter. Shares of Kingfisher shrank by 4.3% on the news. Kingfisher closed 2.9% lower on the Bombay Stock Exchange, pegged at 8.34 rupees.

The removal of the plane from the registry is a welcome news to the airline's lessors such as ILFC and DVB Bank of Germany who have been waiting long enough to get back the planes. The Airports Authority of India had a hard time doing the process because it has also sought clearance of its own obligation with the airline before the leasing companies can take back the planes.

There were concerns raised by the leasing companies contracted by Kingfisher that the inability of the Indian government to help them recover the planes leased to the embattled airline could be a bad precedence for similar deals in the future with Indian airlines.

The ILFC was pleased to announce that it was able to get a favorable decision from the Delhi High Court allowing them to repossess one A321 plane.

The grounded airline has not been profitable since it commenced operations in 2005. Now, mired in huge debt, it owes over $2.5B to its suppliers, lessors, financial firms, airport operators, government taxes, employees and even other airlines.

The government ordered the airline grounded in October last year after a series of problems affecting the airline's payment of salaries to its employees, flight delays as well as sudden flight cancellations without prior warning.

The troubled airline failed to renew its license to fly on December 31, 2012 and has not even sent a rehabilitation plan to the government as a prerequisite to have its license reinstated, contrary to what Kingfisher founder, Vijay Mallya, claimed last week.

According to Mr. Mishra, Kingfisher still has 25 planes left in its possession. He didn't disclose how many are company-owned and how many are leased.

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