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ATR Scraps Kingfisher Order for 38 Planes Over Missed Payments
Jan. 18 (Bloomberg) -- Avions de Transport Regional, a maker of turboprop aircraft, scrapped a 38-plane order from Kingfisher Airlines Ltd. over the Indian carrier’s inability to make payments, Chief Executive Officer Filippo Bagnato said.
“We didn’t think the situation of Kingfisher today was such that in a short time they’d be in a position to take additional planes,” Bagnato said in Paris today. “There were issues with the continuity of pre-delivery payments.”
Pre-delivery payments are sums paid by airlines between the signing of an initial purchase contract and the actual delivery of the plane. Kingfisher didn’t ask for the cancellations, he said.
Kingfisher, controlled by billionaire Vijay Mallya, has cut flights, scrapped low-cost services and delayed Airbus SAS A380 deliveries as part of a turnaround plan following 16 straight quarterly losses. The airline, based in Bangalore, is seeking new loans to pay for operating costs after pledging assets ranging from its brand to office furniture for loans of 64.2 billion rupees ($1.3 billion).
Kingfisher told its lenders yesterday that it may receive an equity infusion of $250 million by March, three people familiar with the matter said.
Banks have told the unprofitable airline that they will provide short-term working capital loans after it secures the investment, said one of the people who declined to be identified because the talks are private. The funds may come from an Indian investor, two of them said, without elaborating.
Shares of the airline advanced 1 percent to 25.35 rupees in Mumbai after India’s aviation and finance ministries recommended allowing foreign airlines to buy as much as 49 percent of local operators, a move that may help the carrier access funds.
Grounded Planes
Prakash Mirpuri, a spokesman at Kingfisher, didn’t immediately respond to an e-mail and a text message to his mobile phone seeking comment on the order cancellation.
ATR has been negotiating with Kingfisher for about two years over the plane deliveries, according to the company, a joint venture of European Aeronautic, Defence & Space Co. and Finmeccanica SpA of Italy.
Kingfisher, which had 27 ATR planes in its fleet of 66 as of March 31, had grounded 12 of these, prompting financial scrutiny by India’s aviation regulator in December to ascertain the airline’s ability to pay for engines and spares.
Kingfisher has enough pilots and engineers to maintain services and the regulator had no “significant findings or concerns with regard to safety,” Sanjay Aggarwal, the airline’s chief executive officer, said in a statement Jan. 5.
“We didn’t think the situation of Kingfisher today was such that in a short time they’d be in a position to take additional planes,” Bagnato said in Paris today. “There were issues with the continuity of pre-delivery payments.”
Pre-delivery payments are sums paid by airlines between the signing of an initial purchase contract and the actual delivery of the plane. Kingfisher didn’t ask for the cancellations, he said.
Kingfisher, controlled by billionaire Vijay Mallya, has cut flights, scrapped low-cost services and delayed Airbus SAS A380 deliveries as part of a turnaround plan following 16 straight quarterly losses. The airline, based in Bangalore, is seeking new loans to pay for operating costs after pledging assets ranging from its brand to office furniture for loans of 64.2 billion rupees ($1.3 billion).
Kingfisher told its lenders yesterday that it may receive an equity infusion of $250 million by March, three people familiar with the matter said.
Banks have told the unprofitable airline that they will provide short-term working capital loans after it secures the investment, said one of the people who declined to be identified because the talks are private. The funds may come from an Indian investor, two of them said, without elaborating.
Shares of the airline advanced 1 percent to 25.35 rupees in Mumbai after India’s aviation and finance ministries recommended allowing foreign airlines to buy as much as 49 percent of local operators, a move that may help the carrier access funds.
Grounded Planes
Prakash Mirpuri, a spokesman at Kingfisher, didn’t immediately respond to an e-mail and a text message to his mobile phone seeking comment on the order cancellation.
ATR has been negotiating with Kingfisher for about two years over the plane deliveries, according to the company, a joint venture of European Aeronautic, Defence & Space Co. and Finmeccanica SpA of Italy.
Kingfisher, which had 27 ATR planes in its fleet of 66 as of March 31, had grounded 12 of these, prompting financial scrutiny by India’s aviation regulator in December to ascertain the airline’s ability to pay for engines and spares.
Kingfisher has enough pilots and engineers to maintain services and the regulator had no “significant findings or concerns with regard to safety,” Sanjay Aggarwal, the airline’s chief executive officer, said in a statement Jan. 5.
