Kingfisher cannot afford maintenance, grounds 15 planes

MUMBAI, India – Cash-strapped Kingfisher Airlines has grounded 15 aircraft after being unable to meet maintenance and overhaul expenses, a move that could curtail its domestic and international operat

MUMBAI, India – Cash-strapped Kingfisher Airlines has grounded 15 aircraft after being unable to meet maintenance and overhaul expenses, a move that could curtail its domestic and international operations further.

The beleaguered carrier owned by liquor baron Vijay Mallya is looking for funds from investors and a softer stand from banks to stay afloat. On Thursday, it let go over 50 senior and junior pilots before the completion of their notice period.

“Kingfisher has grounded aircraft as it using these grounded aircraft as Christmas tree (taking parts from one aircraft to service need of other) to keep certain number of aircraft in the fleet active,” an industry person familiar with the development said, not wanting to be identified.

Kingfisher refused to comment on the grounding of planes but on the pilots’ issue, a spokesperson for the airline said, “We have enough number of pilots to keep our aircraft operational.”

About 140 pilots of Kingfisher have put in their papers and 11 have already left without the company giving them a clearance to joint rival budget airline IndiGo. Some pilots have signed up for Naresh Goyal-promoted Jet Airways’ ATR fleet.

Kingfisher, which has about 750 pilots, has not divulged how many pilots have left in the past one year. Senior executives say that despite the airline operating with a curtailed fleet, it has not faced a situation of surplus pilots, indicating that the attrition rate is high.

Kingfisher’s grounded aircraft are parked at various airports across the country and include the wide-body A330s that are used for long hauls. The airline, which announced in November it was cutting over 50 of its 345 flights, is likely to run the curtailed schedule till March.

This is not the first time Mallya has been forced to take such a step. Last year, the airline grounded 16 aircraft from its narrow-body fleet (A320s) because of engine material failure on its V2500-A5 engine type. The company was able to resolve the issue with engine manufacturer IAE after several rounds of talks. The fleet, barring one aircraft, was pressed into operation by August.

Kingfisher, which had 69 aircraft by end-2010, now has 40 in its active fleet, of which 15 are ATRs and the rest a mix of A320s, A321s and A330s.

Aviation experts say it is possible to use parts of one aircraft for another, but some parts with a serial number are difficult to remove and this is becoming a concern with leasing companies.

Kingfisher is currently negotiating with leasing companies to take back aircraft on ‘as is’ basis. People with knowledge of the matter said that the leasing companies, which are yet to agree to any formula, haven’t approached the Indian civil aviation regulator for de-possessing of aircraft either.

Airline executives say that the grounded aircraft are bleeding the carrier as the fixed costs of lease rentals and parking charges need to be paid.

“Even if we operate with this shrunk fleet of 40 aircraft, it is fine, but what is killing us is the fixed cost on grounded aircraft,” an executive said.

The airline posted a loss of 1,057 crore in 2010-11 and a loss of over 400 crore in the second quarter of this fiscal. Kingfisher, whose financial woes started in 2009, is finding it difficult to run operations on a daily basis. It is yet to pay the November salary dues of its 7,500 employees.

Funding from banks have dried up for the airline and its request for working capital loan of about 600-700 crore is still pending with a consortium of 13 public sector banks, which have ruled out another round of restructuring for the carrier.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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