It could indeed turn out to be a good beginning to a brand new year for Kingfisher Airlines and its lender banks, as the airline has paid a part of its interest dues, thus saving the account from turning a non-performing asset. By paying the critical amount, the airline can now expect some additional funding, too, from the banks.
An official of a bank, belonging to the 13-bank consortium, told Business Line that the private airline paid one-month interest amount to the banks. The airline made the payment on the last working day of the third quarter of this fiscal, failing which the account would have turned NPA.
“The company's escrow account was non-functional earlier. But now the airline's ticket sales through credit card are being routed through this escrow account,” he said. Consequently, the one-month critical interest amount has been credited to the member-banks from this account. Failure to make this payment would have resulted in the account turning NPA for about 8-9 banks belonging to the consortium.
The banks had earlier refused to fund the cash-strapped airline further, till the company paid at least the critical interest amount due to the banks. Kingfisher Airlines had sought short-term working capital of Rs 680 crore from the banks. The airline had hired SBI Caps to assess its business and recapitalisation needs.
Banks have a total exposure of about Rs 7,000 crore in the company, of which about Rs 4,000 crore is in the form of term loans.