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Thursday, 24 November 2011

Airbus Updates No.527

AerCap To Take Back Two Kingfisher Jets

India's Kingfisher Airlines said on Thursday lessor AerCap would take back two of its aircraft in coming months as the companies failed to agree extension terms.

"AerCap had two aircraft coming up for renewal in the next three months where we could not agree on mutually acceptable extension terms," a spokesman for Kingfisher said.

"The aircraft will soon be in a MRO (maintenance, repair and overhaul) for preparation and redelivery," he added.

Kingfisher, which has cancelled scores of flights in November and now has around 300 flights daily including international, would add a new aircraft to the fleet in December to replace one of those returned.

A majority of its fleet of 66 aircraft is leased.

The spokesman also said lessors have the contractual right to access documents for all their aircraft on an as-needed basis.

The Wall Street Journal on Thursday reported at least two lessors have agents at Kingfisher's offices copying documents relating to their planes.

Cash-strapped Kingfisher, controlled by flamboyant drinks tycoon Vijay Mallya, is struggling to raise funds.
The company has pushed back deliveries of Airbus's A380 superjumbo airliner and is also set to cancel orders for two A340 aircraft.

Earlier this week, Kingfisher had said its aircraft manufacturers have provided financial support to it and had agreed to a cut in prices.

It has asked banks to offer guarantees to lessors to help it release about INR10 billion rupees locked up with the lessors.

Kingfisher stock has lost more than 63 percent of its value so far in 2011, compared with a 23 percent fall in India's benchmark index.

Kingfisher, which has never made a profit, is in talks with an Indian investor for equity funding. Chairman Mallya last week met a consortium of lenders, led by State Bank of India, in an effort to shore up its finances and get additional working capital.

But banks have been wary of lending to airlines, which are on course to post record losses this fiscal year, hit by high fuel prices and a continuing price war.

Auditors of Jet Airways, India's leading carrier said this month that the airline has to raise funds or generate cash flows to meet obligations.

Kingfisher's auditors had made similar observations and also said its method of accounting of costs incurred on major repairs and maintenance of aircraft is not in accordance with generally accepted accounting standards in India.

But Kingfisher has said the practice is consistent with other major international airlines.
(Reuters)

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