* Kingfisher has not adhered to recovery plan - minister
* Kingfisher to halt international service
* Plans to fly 20 planes on 110-125 daily domestic flights
* Carrier's shares hit all time low
(Updates with Kingfisher plans and Mallya comments)
By Anurag Kotoky
NEW DELHI, March 20 Kingfisher Airlines Ltd
said it will halt international flights and fly just
20 planes as it seeks funding, hours after India warned the
carrier's license may be canceled if it fails to meet safety
norms and financial viability conditions.
The embattled airline, which has debts of $1.3 billion, is
scrambling to raise funds after banks refused to lend more for
its day-to-day operations.
A big cutback in flights has reduced its revenue, leaving
the carrier controlled by flamboyant liquor baron Vijay Mallya
with little cash to pay staff, airports, tax authorities and
"If he gives a plan and says I have that many planes, that
much schedule, then why should we cancel?," Aviation Minister
Ajit Singh said ahead of Mallya's meeting with the regulator to
submit a recovery plan for the carrier.
"The problem is, (in the) last two to three months, he has
given several plans and he has not adhered to any of them,"
Singh said, warning that the airline was liable for prosecution
over unpaid taxes.
"If passenger safety is compromised we'll not let any
airline fly. Safety norms also involves financial viability,"
Kingfisher said it had submitted an interim plan to operate
20 planes on between 110 and 125 domestic routes a day, and halt
international flights by April 10. The carrier's fleet, which
earlier had 64 planes, now has 47.
"We have not submitted an ambitious plan. We have submitted
a holding plan," Mallya told reporters.
The company has said it is in talks with potential
investors, some of which would require India to allow foreign
carriers to own up to 49 percent of Indian airlines, a change
the government is considering.
"Some of the potential investments depend on the change in
FDI (foreign direct investment) policy but there are other
investors we are in discussions with," Kingfisher Chief
Executive Sanjay Aggarwal told reporters.
Cancellations have already disrupted the travel plans of
thousand of passengers across the country and pushed up fares.
Shares of Kingfisher Airlines, which has a market
capitalisation of about $200 million, hit an all-time low in
early trade on Tuesday before closing 5.5 percent lower.
Kingfisher has never made a profit in a struggling Indian
airline industry that is saddled with high fuel costs, stiff
competition and low fares.
Five of India's six airlines are in the red and domestic
carriers are likely to lose a total of $2.5 billion in the year
through March, according to the Centre for Asia-Pacific Aviation
(CAPA), an industry consultancy.
"As a government, we don't want to shut down any industry.
There are employees and customers involved. Kingfisher had 22
percent traffic. If we close it suddenly, where will the fares
go?," Singh said.
Global industry body IATA has suspended Kingfisher from its
settlement system, restricting bookings through overseas agents,
hitting ticket sales. On Monday, the last of Kingfisher's
independent directors resigned.
The carried needs at least $500 million immediately to keep
flying and $800 million to return to full operations, according
Kingfisher's billionaire chairman owns one of the world's
most expensive yachts as well as cricket and Formula One teams,
but he has been unable to raise fresh equity for an airline that
was once India's second biggest by passengers.
"Mallya has been talking a lot about capital but I think
he's only doing it to calm the situation and postpone the
problems. We have not seen any money," said a senior executive
at a state-run bank, which recently downgraded Kingfisher's loan
to non-performing status.
There are no provisions for companies to declare themselves
legally bankrupt in India.
"Right now, it is a complicated situation. We are closely
monitoring," said the banker, who requested anonymity as he was
not allowed to talk about clients.
(Writing and additional reporting by Swati Pandey; Editing by
Tony Munroe and Robert Birsel)