Dec. 21 (Bloomberg) -- Kingfisher Airlines Ltd., the Indian carrier that halted flights because of a cash crunch, applied to have its operating license renewed two weeks before the permit will expire, a civil aviation ministry official said.
The Directorate General of Civil Aviation won’t act on the application until the carrier submits a plan detailing how it will pay vendor debts and fund operations, the official, who declined to be identified citing rules, said yesterday. The regulator suspended the airline’s permit in October following flight disruptions after employees walked out over unpaid wages.
If the permit lapses at the end of this month, Kingfisher can still seek renewal within two years and then resume flights, according to a directorate document. The carrier plans to restart operations in a phased manner using its own funds, according to a plan the airline submitted to bankers on Dec. 17.
Kingfisher, controlled by liquor tycoon Vijay Mallya, has been seeking cash for more than two years and said it’s in talks with possible investors, including Etihad Airways PJSC. The carrier, which was No. 2 in India by market share about a year ago, has piled up debt of 85 billion rupees ($1.55 billion). It pared more than two-thirds of its flight services and returned planes to lessors before halting operations in October.
Shares of Kingfisher fell 1.3 percent to 15.20 rupees at the close in Mumbai, reversing gains of as much as 4.6 percent. The stock has dropped 30 percent in the past year.
International Lease Finance Corp., the plane-leasing business of American International Group Inc., has requested that the Indian aviation regulator deregister four aircraft leased to Kingfisher after the termination of a contract. The regulator has started the process, the official said.
AIG said Dec. 10 that a group of Chinese investors agreed to buy 80 percent of ILFC for $4.23 billion.
ILFC is also seeking return of one aircraft leased to Kingfisher and subsequently impounded by Indian tax authorities after the airline defaulted on payments, according to the official. The detention of the aircraft is “illegal” and will send the wrong signal to companies wanting to do business in India, Prakash Mirpuri, a spokesman for Kingfisher, said in a text message on Dec. 11. He didn’t immediately respond to an e-mail seeking comments yesterday on the license renewal.
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