Fri, 11 Jan 2013 16:45:00 GMT | By Business Line

Government not satisfied with Kingfisher’s investment plan

The airline plans to restart operations in two phases with phase one most likely to be implemented from Summer Schedule 2013

Government not satisfied with Kingfisher’s investment plan (© Reuters)

New Delhi: Kingfisher Airline’s plans to take to the skies could tumble with senior Government officials indicating that they were not satisfied by the airline’s plans to invest Rs 650 crore to restart operations as it might not guarantee efficient and reliable services.

“The revival plan, which was submitted by the airline, had lots of issues regarding lenders and staff payments which we felt may not lead to reliable services," a senior Government official said. The revival plan submitted to the Directorate-General of Civil Aviation (DGCA) also has no provisions for paying airport operators, the officer said adding that payment of staff salaries and wages in a phased manner could lead to a situation where the airline may not be able to provide reliable services because if staff members were not paid then they may stop working again and this could inconvenience passengers.

Incidentally, in December last year shortly before its operating licence lapsed, the airline’s Chief Executive Officer, Sanjay Agarwal had met the DGCA and submitted a letter indicating that the UB Group will pump in Rs 652 crore over 12 months to facilitate the airline restarting its operations. At that time also DGCA officials had indicated that the airline’s communication was not enough for its licence to be renewed.

Earlier this week after employees sought sale of assets to clear their back wages, the airline promoter and Member of Parliament, Vijay Mallya, wrote to them telling them about his plans of submitting a revival plan to the DGCA. In the letter, Mallya mentioned how the UB Group was willing to provide Rs 650 crore to the airline.

He also mentioned that the airline plans to restart operations in two phases. In the first phase, which should be implemented from Summer Schedule 2013, the airline plans to start operations with seven aircraft and slowly increase this number to 21 aircraft in four months. In the second phase, the airline plans to grow to 57 aircraft within 12 months of recapitalisation, the letter states.

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