India may shut Kingfisher as fleet remains grounded

Fri Oct 5, 2012 10:44am EDT
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By Tony Munroe and Anurag Kotoky

MUMBAI/NEW DELHI (Reuters) - Debt-strapped Kingfisher Airlines KING.NS, devoid of a turnaround plan to get back into the air, faced a possible shutdown by the government after extending the grounding of its fleet for another week.

The industry regulator told the airline late on Friday to demonstrate why its permit to fly should not be suspended or cancelled, and gave it 15 days to reply.

The Directorate General of Civil Aviation said the airline had failed to establish a "safe, efficient and reliable service".

Kingfisher stopped flights on Monday after a weekend protest by staff turned violent. Airline employees have not been paid for seven months.

"The airline has not been able to resolve its issues. They have not approached DGCA with any operational plan," the ministry of civil aviation said in a statement.

About 150 Kingfisher staff staged a protest march in Mumbai earlier on Friday, following what police said was the suicide of an employee's wife worried about the family's precarious finances. Another 100 staff held a candlelit march in Delhi on Friday night, adding to pressure to resolve the carrier's long-running financial problems.

Kingfisher, once India's second biggest airline, has failed to find an overseas airline or other investors to bring in fresh equity.

The Center for Asia Pacific Aviation, which estimates Kingfisher's debt at around $2.5 billion, said a fully funded turnaround would cost at least $1 billion. It said Kingfisher had only an outside chance of recovery and that its "massive debt burden, crippled fleet and poor employee morale" would deter a foreign airline investor.   Continued...

Kingfisher Airlines customers wait at a check-in queue at Mumbai's domestic airport in this March 20, 2012 file photograph. REUTERS/Vivek Prakash/Files