Bloomberg News

Kingfisher Seeks $234 Million Damages From Vendor IAE (Correct)

September 04, 2013

(Corrects details on IAE’s ownership in second paragraph in story published yesterday.)

Kingfisher Airlines Ltd. (KAIR), the carrier that’s halted flights after defaulting on payments to employees and airports, filed a $234 million lawsuit for damages from International Aero Engines AG, citing engine defects.

The lawsuit citing deficiencies in IAE’s V2500-A5 engine was filed in a court in the Indian city of Bangalore, the carrier said in its annual report for the year ended March. About 190 airlines and lessors from about 70 countries use the V2500 engines, according to the website of East Hartford, Connecticut-based IAE, whose shareholders include United Technologies Corp. (UTX:US)’s Pratt & Whitney unit.

Engine problems and difficult operating environment were cited by the carrier as reasons for the Bangalore-based company’s financial stress. The airline grounded its fleet in October after employees walked out over delayed salaries. India’s aviation regulator later suspended the airline’s permit because of service disruptions and the permit lapsed Dec. 31.

Heather Waldron, communications manager at IAE, said in an e-mailed response that the company can’t comment on pending litigation.

Kingfisher shares rose as much as 5.8 percent, poised for the biggest gain since July 9, to 3.81 rupees as of 9:41 a.m. in Mumbai.

The carrier was in talks with one potential investor as of Aug. 14 to fund its restart, Chairman Vijay Mallya said in the report. Mallya has been seeking funds for more than two years for the carrier that posted losses for five straight years and had net debt of 86.4 billion rupees ($1.3 billion) as of March 31.

Kingfisher’s lessors have repossessed aircraft after payment defaults and the nation’s state-owned Airports Authority of India sued the airline because it failed to pay 3 billion rupees of airport fees.

To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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