Paramount Airways Still Grounded
Tuesday, 11th June 2013 at 01:44am
Chennai-based Paramount Airways has an outstanding debt of Rs550 crore to lending institutions which the airline has not been able to pay. The unpaid debt has kept the airline from taking off which was originally planned last month.
The airline lost its license in 2010 after the government's Director-General of Civil Aviation (DGCA) ordered its grounding due to its failure to subscribe to the aviation industry's mandate over the airline to maintain a fleet of five aircraft.
Prior to the grounding, the airline engaged in a legal battle with its aircraft lessors causing gradual cessation of its operations due to the grounding of its planes as ordered by the court.
Early this year, the airline's owner, M Thiagarajan, reportedly met with Ajit Singh and DGCA officials in Delhi to initiate talks about the airline's return to commercial operations. However, right after the meeting, officials representing six bank creditors sought the help of DGCA to prevent the airline from resuming operations.
Five of the six lending institutions include Bank of India, Central Bank of India, Indian Bank, IDBI Bank and State Bank of India. The six banks wrote to the Indian government in February requesting to stop the carrier from resuming commercial operations.
The combined debt of Paramount Airways to all six banks has amounted to Rs550 crore.
The DGCA favored the side of bank creditors and successfully barred the airline's scheduled to return to the skies in April. It said that the airline needs to first settle its obligations to all its lenders before it is given a go signal to resume operations.
The airline management, however, confirmed with Express that it has already settled all its debt obligations so it is a matter of time before they will resume operations. In fact, the airline claimed it has received NOC from the regulatory board allowing them to restart operations.
Paramount Airways is confident that it could restart operations soon buoyed by its successful defense of a lawsuit filed against them by its aircraft lessors in 2010. In November 2012, the British court awarded the carrier a sum of Rs1,650 crore as a compensation in the aforementioned lawsuit.
The airline is reportedly in talks with several foreign airlines for possible capital investments following the government's easing of FDI in local aviation business.
By: Pete Lee.