Germany’s DVB Bank Sues India’s Aviation Regulator, Kingfisher Airlines To Get Two Planes Deregistered

Germany’s DVB Bank SE has sued India’s aviation regulator – the Directorate General of Civil Aviation (DGCA) -- and cash-strapped Kingfisher Airlines to get two of the planes financed by it deregistered.

The creditors of the beleaguered Kingfisher Airlines, which has failed to payback its debts, are adopting various measures, including impounding the air carrier’s assets, to recoup their funds.

DVB Bank has asked the DGCA to deregister two of Kingfisher’s planes it has financed to enable the bank to use them or lease them out.

"Our main trouble really is with the DGCA, which should deregister the aircraft," Carsten Gerlach, senior vice president of aviation finance at DVB, was quoted as saying by Reuters.

"We have now filed a writ petition at the High Court in Delhi against DGCA and also Kingfisher, strictly focused on deregistration," Gerlach said over phone from Frankfurt.

The two planes in question are parked in Istanbul, but the bank can use them only after the DGCA deregisters them.

The DGCA claims that it cannot deregister the planes as there are other creditors, apart from DVB Bank, who also have rights over the planes, Reuters has reported quoting a source with direct knowledge of the situation.

Meanwhile, tax authorities have also staked claim on the Kingfisher planes. Two of the planes, including an Airbus A-320 parked in Mumbai, were impounded by the authorities to recover the tax dues.

Both Kingfisher and the leasing firms have objected to such unilateral impounding by the tax authorities stating that it violates the rights of the foreign lessors.

"People just go the airport, see a plane in Kingfisher colors, and stake their claim on it," the source said.

"What they don't understand is that the plane may not belong to Kingfisher at all,” Reuters quoted the source as saying.

The U.S.-based International Lease Finance Corp, which has asked DGCA to deregister four planes it owns, is caught up in a similar problem as one of the four planes -- an Airbus A-320 -- was impounded by the tax authorities last week.

"This will send a very wrong signal to any foreigner who wishes to do business in the aviation industry in India," the airline said in a statement last week.

Kingfisher Airlines, which has not operated any flights since October when its employees went on a strike demanding their pending salaries, owes about Rs. 80 billion to the lenders, suppliers and utility providers. Its flying license was cancelled by the DGCA last month as it failed to give a satisfactory revival plan to the aviation regulator.

The company recently indicated that it was in advanced stage of talks with Gulf’s Etihad Airways to sell 48 percent of its stakes.