Kingfisher, GECAS in a tangle over lease payment defaults

New Delhi: Kingfisher Airlines and GE Commercial Aviation Services (GECAS) are now in litigation concerning default in payment of lease rentals for four A320s. The US company has filed a complaint with Indian civil aviation regulator, the Directorate General of Civil Aviation (DGCA) regarding a default by Kingfisher and has asked the regulator not only to de-register the aircraft but also to assist in repossession.
 
GECAS is one of the world's top aircraft lessors.

These claims are denied by UB Group-owned Kingfisher which has now obtained a stay order from the Karnataka High Court to prevent any such moves. Company representatives have asserted that there has been no default on part of Kingfisher, which was evident from the fact that the High Court had admitted its petition.

Company officials admitted that the airline indeed had some disputes with GECAS on the terms of return of the aircraft but said that GECAS was adopting an unreasonable stance. They refrained from providing any details, as did GECAS.

Meanwhile, DGCA officials have confirmed that a dispute indeed exists and that they had been approached fro repossession of aircraft, but said a decision would be taken only after hearing both sides.

The latest tussle may be indicative of the cash crunch situation being faced by airlines. The government has moved to ease the situation for domestic carriers by allowing delayed payment of dues by airlines.

Kingfisher Airlines nearly doubled its losses to Rs483.2 crore for the quarter to 30 September this year as compared to the same period last year.

Last month, Kingfisher and Jet Airways announced a strategic alliance designed to stave off continuing losses faced by both carriers. The new arrangement would allow both carriers to rationalise operations and realise cost savings.
 
Faced by rising costs and declining travel, Kingfisher,to date, has returned two of its aircraft to lessors and may be in discussions to return another eight.