Shares of the beleaguered private airline, controlled by flamboyant liquor baron Vijay Mallya, dropped more than 2 percent Monday over fears the airline would lose the license.
According to a PTI report, airline officials made last-minute efforts to persuade the Directorate General of Civil Aviation (DGCA) to avoid the cancellation of the license. Both the DGCA and the Civil Aviation Ministry had announced earlier that Kingfisher would not be allowed to fly until it came up with a workable plan to revive the air carrier.
The DGCA had sought more details about a proposal submitted by the airline officials last week and said that the proposal did not contain concrete funding plans.
Kingfisher Airlines’ flying license was suspended by the DGCA on Oct.20 after the airline had failed to operate its services efficiently.
The flying permit can be renewed any time in the next two years, but the termination of the license would mean that the airline will be forced to start from the scratch and go through the lengthy process of acquiring a license anew as per government regulations.
On Dec. 10, media reports said that Kingfisher Airlines had finalized a deal with Etihad Airways to sell 48 percent of its stake for 30 billion rupees, and that an official confirmation of the deal would be made on Dec. 28, the same day as Mallya's birthday. However, no such announcement appeared on that date.
Losing the license would make the deal with foreign investors difficult for Kingfisher Airlines, an ET Now report said.
"We doubt that any outside investor will be interested in an airline which doesn't have a flying license. So difficulties are going to increase from here onwards, and along with it future of Kingfisher Airlines and its 4,000 employees are at stake,” says Sumit Chaturvedi of ET Now.
The airline has grounded all its flights since Oct. 1 as it doesn’t have the resources to keep it operational. Kingfisher has never made a profit since its inception in 2005, and it has a total debt burden of over Rs. 80 billion.
The shares closed 2.36 percent down at Rs 14.92 on the Bombay Stock Exchange’s Sensex on Monday.