UPDATE 1-Kingfisher seeks $236 mln damages from engine-maker IAE

Mon Sep 2, 2013 11:23am EDT

NEW DELHI, Sept 2 (Reuters) - A founder group company of grounded Indian carrier Kingfisher Airlines Ltd is seeking about $236 million in damages from engine-maker International Aero Engines for allegedly supplying "inherently defective" engines, the airline said.

United Breweries (Holdings) Ltd has filed a lawsuit against International Aero Engines AG and its shareholders in a court in the southern Indian city of Bangalore, Kingfisher said in its annual report, which was made publicly available on Monday.

IAE, part-owned by United Technologies Corp's Pratt & Whitney unit, competes with CFM International - a joint-venture of General Electric and France's Safran - to supply engines for Airbus A320 jetliners.

"IAE cannot comment on pending litigation," said Heather Waldron, communications manager for the U.S.-based engine firm.

The lawsuit alleges that the IAE V2500-A5 engines supplied to Kingfisher were "inherently defective, both in design and manufacture", Kingfisher said.

Kingfisher, controlled by liquor baron Vijay Mallya, has not flown since last October because of a funding crunch. Its flying licences expired at the end of last year and the company has so far had little success in a bid to revive operations.

Kingfisher, which had never reported a profit during its eight years of operations, is in talks with one potential investor in the airline as of Aug. 14, it said in the annual report, without naming any company.

A difficult operating environment as well as the engine problems "severely affected" its operations and finances during the year to March 2013, Kingfisher said.

The carrier had grounded 14 Airbus A320 family aircraft that used the V2500 engines during the year to March 2011 due to technical problems relating to the engines, it had said in its annual report for that year.

A Kingfisher spokesman did not comment beyond the annual report.

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