Kingfisher in spat with GECAS over early return of aircraft

Singapore
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India's Kingfisher Airlines is negotiating with GE Commercial Aviation Services (GECAS) on the terms and conditions for the early return of four Airbus A320s as other lessors are also looking to take aircraft out of the loss-making carrier.

Kingfisher's spokesman in Mumbai says the carrier is meeting with GECAS on 12 November to try and come to an agreement on the return of four A320s.

Some reports in India, quoting from the country's Directorate General of Civil Aviation (DGCA), say GECAS has called the DGCA and complained that the airline has defaulted on payments.

Kingfisher's spokesman says these reports are untrue and that Kingfisher has defaulted on no payments owing to GECAS and GECAS has so far refrained from notifying the DGCA.

But he says Kingfisher has a disagreement with GECAS over the terms and conditions for the return of the four aircraft. These terms and conditions are quite onerous, he adds.

The spokesman also says the airline sought and received from the courts in India a temporary injunction barring GECAS from repossessing the four aircraft.

It did this because GECAS was talking tough in earlier negotiations and Kingfisher wanted to protect itself in case it tried to approach the DGCA and have the aircraft taken off the Indian aircraft registry.

While Kingfisher's dispute with GECAS has been played out in the Indian courts, aircraft leasing and financing sources say Kingfisher is negotiating with other aircraft owners such as Aircastle for the early return of A320s.

The Indian carrier has said it will be cutting capacity and has returned two A320s early. It is also negotiating to return eight more. Industry sources say the two A320s were returned to AWAS.

The move to slash capacity is in response to a fall in passenger demand brought on by the slowing economy plus the airline has been reporting quarterly losses and wants to improve its finances.

GECAS managing director for Asia Pacific, Mike Jones, was unavailable for comment today as were officials from Aircastle in Singapore.

Kingfisher has nearly 50 A320-family aircraft from a long list of lessors that includes AerCap, Aircastle, Aviation Capital Group, AWAS and ILFC.

It also operates Airbus A330s and has on order Airbus A340s and Airbus A380s as well as more A320-family aircraft. Airbus has agreed to delay the delivery of some of these.