ILFC warns India: Aeroplane repossession row could scare off funds

Jan 23 2013, 09:47 IST
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ILFC warns India: Aeroplane repossession row could scare off funds. (Reuters) ILFC warns India: Aeroplane repossession row could scare off funds. (Reuters)
SummaryKingfisher Airlines would have to return their planes if they could not pay their bills.

One of the world's largest leasing firms has warned India the failure of troubled carriers like Kingfisher Airlines to return airplanes when they cannot pay their bills could put the country's aviation growth at risk by scaring away new funding.

ILFC, which owns over 900 aircraft and rents them out to airlines for several years at a time, is the latest industry player to clash with the Indian carrier, whose financial difficulties have left its aircraft grounded since October.

"I am not happy with the way things are working out in India right now," ILFC Chief Executive Henri Courpron said.

"There is not a clear path to exiting fleets out of India when necessary. There are too many cooks in the kitchen and too many authorities involved in what should be a clear process."

ILFC has six Airbus jets with Kingfisher of which four have been taken off the country's register. The Los Angeles-based lessor has sent a team to repossess the jets for unpaid bills. But they remain stranded by adminstrative hurdles and problems getting the planes ready to fly, Courpron said.

ILFC is not the only firm citing problems getting planes back from Indian liquor baron Vijay Mallya's airline, which is estimated to owe $2.5 billion to banks, staff and suppliers.

Germany's DVB Bank said in December it had sued India's aviation regulator and Kingfisher to have two planes it financed for the troubled carrier de-registered, a possible first step towards recouping its funds.

Courpron said the Kingfisher saga was not merely a problem for those directly involved. Indian authorities could suffer a setback in aviation generally if they did not provide the "safe harbour" needed when lessors decide where to risk their assets.

"If they want to grow their industry, if they want support from the financing community in financing their aircraft generally,... then they need to enforce the rules that allow the financiers to get access to their assets when it is waranted."

Indian airlines will need 1,043 new passenger and freighter aircraft valued at $145 billion by 2030 to satisfy surging annual demand, Airbus said last year.

ILFC's warning came as India's civil aviation minister said Kingfisher needed at least 10 billion rupees ($185.65 million) to restart its grounded operations and must also demonstrate an ability to sustain itself for at least 6 months.

A senior government source said India was willing to support a rescue plan from Kingfisher if it could settle months

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