Kingfisher Struggles With Aircraft On Ground As Creditors Close In

Asia-Pacific

Aviation Daily Jul 28 , 2010 , p. 10
Neelam Mathews

Kingfisher Airlines, India’s second-largest private carrier, has about 15 aircraft on the ground—of its total fleet of 66—mostly because of the unavailability of spares, engines and lack of finances, The DAILY has learned.

The carrier says that even though it capitalized on a strong resurgence in domestic demand in April and June, which lifted its load factors to 81% from 69% and improved yields 5%, it suffered “an extraordinary cost impact of over $7.5 million due to the uncontrollable grounding of aircraft.”

The International Aero Engines V2500-A5 powerplant selected by Kingfisher for its fleet of Airbus A319, A320 and A321 aircraft, experienced major issues related to “metallurgy problems,” according to a company engineer. The engines are believed to have suffered minute cracks in the hot core.

“IAE has identified an issue that has impacted a limited number of Kingfisher’s engines. We are supporting the airline while affected engines are overhauled. IAE has identified a simple fix for this issue, which involves the replacement of certain nuts,” an IAE spokesman told The DAILY last year.

There are more than 120 V2500-powered Airbus A319, A320 and A321 aircraft in service in India and more are on order. The National Aviation Company of India Ld., Air India’s holding company, was a launch customer in 1989 for the IV2500-A1 engine, in which Rolls-Royce is a major partner. Budget carrier IndiGo was the launch customer for V2500Select, a combined engine upgrade and aftermarket support program.

To help improve its dire situation, Kingfisher in February brought in U.S. consultants Seabury Aviation and Aerospace to advise it on restructuring its operations, including fleet optimization. It had recruited Accenture earlier. It is not clear if the contract with Seabury is still on.

Burdened with heavy debt, the airline continues to have issues related to finances. Recently, a local newspaper reported that Singapore-based DVB Aviation Finance Asia, a subsidiary of Germany’s DVB Bank, was suing the carrier for defaulting on three months’ payments for two leased A320s. The suit—said to have been filed on July 16—will be heard by the Queen’s Bench division’s commercial court.

Kingfisher also is behind on paying its oil companies for turbine fuel and has received warnings that it will have to buy fuel on a cash-and-carry basis.