Kingfisher's turbulence worsens

The troubled Indian airline Kingfisher was set to lose its licence last night after failing to convince the country's Directorate General of Civil Aviation that it was fit to fly again.

The airline has not operated any flights since October, after it grounded all its aircraft when employees walked out over unpaid salaries. The aviation regulator then suspended Kingfisher's licence, saying the airline had failed to provide a "convincing" plan to resume flying.

However, its operations had been crippled for much of 2012 as mounting debt led to large numbers of its scheduled flights being cancelled at short notice. The airline, owned by the Indian tycoon Vijay Mallya, has been unprofitable since its launched in May 2005.

By last June, it had accumulated losses of US$1.9 billion (Dh6.97 billion) and owed $2.5bn to lenders, suppliers, other airline partners and the Indian government.

Kingfisher had until the end of December to submit an operations plan and an application to renew its licence.

The aviation ministry last week said the airline had submitted a proposal to the government to partly resume flights.

Its business plan called for 6.52bn rupees (Dh435.4m) over the next year to pay salaries, refurbish planes and fund operations. However, the airline offered no proposals as to how it would raise the cash, the civil aviation minister Ajit Singh said.

If its licence expires, Kingfisher will have to follow a longer procedure to get government approval to resume services. The airline's only hope of survival might depend now on an outside investor stepping in, said Kapil Kaul of the aviation consultancy, CAPA Centre for Aviation.

"There could be a gradual resumption, which could be more determined and focused on a very realistic business scale," he said. "Once they start, they could build a 20-plane operation and then the second stage of capitalisation will come from an investor."

Shares of Kingfisher fell as much as 4.3 per cent to 14.60 rupees in Mumbai trading at one point yesterday. The stock has declined 28 per cent this year.

Kingfisher was not available for comment.

In September, the government eased airline ownership rules that allowed overseas carriers to own as much as 49 per cent in local operators.