Gasping Kingfisher begs for government relief

AirAsia starts hiring, set to be operational later this year.

R. Chandrasekaran

Will the beleaguered business tycoon Vijay Mallya’s Kingfisher Airlines be able to convince the lenders of its second revival plan to restart its operations? The revival plan comes on the heels of Malaysia-based AirAsia getting the government nod to start a fresh airliner with Tata Group’s participation.

Kingfisher Airlines was India’s number two air carrier in terms of market share in 2011. The airliner, which was grounded in October after suffering losses for five straight years amidst strikes and unpaid salary, had earlier submitted a proposal to the government authorities and it was rejected terming the funding as inadequate besides not disclosing its plans to pay the money obligated to airports. The company had also lost its flying permit on December 31st.

Now, the company has submitted a revised plan to the government, to start operations. The current plan envisages its promoter company UB Group agreeing to lend Rs.6.5 billion and resume air services with seven aircraft, according to its CEO Sanjay Aggarwal.

KFA wants to resume its services with two ATR aircraft and five Airbus A320s to start with and increase the fleet strength to 20. The planes are reportedly in operational conditions to restart its services.

If reports are to be believed, the troubled airliner is trying very hard to get the support from the government-controlled Airports Authority of India and allows it to repay its dues in parts or installments.

KFA and its promoters have to pull all its resources to restart its airline so as to beat the tough competition expected ahead in the wake of many overseas carriers planning to either expand its presence or enter the air travel as the demand is predicted to jump three fold by the end of 2020.

Mallya is also expected to use the proceeds of his stake sale in United Spirits to reduce KFA’s debt. The battered airline’s talks with investors and Etihad Airways were not productive.

AirAsia is expected to commence its services in the fourth quarter of 2013; it has started hiring personnel in Chennai for its operations. Therefore, any decision in favor of the KFA restarting its operations will put itself ahead of the new entrants expected later in the year.

To contact the author, e-mail:В rchandrasekaran@americanbazaaronline.com

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