Good times gone bad

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No takers Mallya’s hopes of finding a buyer remains a distant dream, Photo: AFP

IS KINGFISHER Airlines a piece of junk? Almost. Grounded since 1 October 2012 and its flying licence expired on 31 December, Vijay Mallya’s once-posh airline is desperate for rescue but has no buyers. Mallya is himself avoiding it like the plague as the airline has dented his brand significantly. Many had anticipated global big birds to come for easy and cheap prey and get an entry into the Indian aviation space. That didn’t happen, and ironically things have to come to a situation that Mallya alone can resuscitate the carrier.

“Whatever assets Kingfisher has will likely be carved up and any leased jets will be returned to lessors and the airline will cease to look like an airline,” says Saj Ahmed of London-based Strategic Aero Research.

Kapil Kaul, CEO of Centre for Asia Pac Aviation, even feels that it’s cheaper to start a new airline than restart Kingfisher. The aviation industry wants to see Mallya spend his own money towards recapitalising the airline. “He could have stepped in earlier with his own money, rather than wait for a third party to invest, which to date has still failed to materialise,” says Ahmed.

According to experts, $600 million or more will be required to put Kingfisher back into the air even as regulatory authorities are willing to renew the licence if Mallya can cough up $200 million for a start.

So why aren’t investors coming in? There’s a host of reasons. One, it’s not an operating airline and buyers have the option of better-run SpiceJet, Go Air or Jet Airways that are wiling to sell stake. Two, the massive debt of Rs 15,000 crore is hanging like a Damocles’ sword. Employee morale is low, many human resource-linked issues are stuck in court cases and the pilot base has shrunk.

In fresh trouble, state-run Airports Authority of India (AAI) said it will not go by the “empty promises” of the airline management and insisted on being paid its dues of Rs 290 crore. At this rate, if the planes keep standing at airports, the quality of aircraft will come under question. “I just find it difficult to see a situation where that airline can ever fly again,” avers Ahmed. What, then, can Mallya do? “There could be some value in the brand, licence too can be worth a lot since the government has put a freeze on new airline licences,” says Kaul. That, if nothing else, could be the one silver lining for Mallya.

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