Kingfisher Airlines is likely to take to the skies again. Its promoter, Vijay Mallya, plans to pump in Rs 425 crore so that the airline, which has been grounded since October, can resume ‘limited operations’.
Mallya, who is said to be in talks with a couple of foreign carriers, including Etihad Airways, to induct one of them as a majority stakeholder in KFA, has indicated to a consortium of lenders his keenness to revive the beleaguered airline.
Shyamal Acharya, Deputy Managing Director, State Bank of India, said “Banks will not give any additional financing for the limited restart plan of the beleaguered airline. The airline promoter will make his own funding arrangements. The airline is in talks with Directorate- General of Civil Aviation (DGCA) to get their operations started.”
A small group of six banks — SBI, Punjab National Bank, Bank of India, Bank of Baroda, IDBI Bank and United Bank of India — has been formed to assess the short-term stability and long-term viability of KFA. This group will be meeting in three-four days.
Acharya said if the limited restart plan takes off as discussed and the group of bankers is satisfied with the plan, the banks “would not be averse to restructuring (the airline’s debt).”
“If what we have discussed today doesn’t work, then we will start the recovery process,” Acharya said.
Besides KFA Chairman Vijay Mallya, Chief Financial Officer of the UB Group Ravi Nedungadi and CEO Sanjay Agarwal were also present at the meeting.
Acharya added that whole or part of the funding may come from the proceeds of the United Spirits-Diageo deal.
In November, the world’s biggest spirits group Diageo had agreed to acquire 53.4 per cent of Vijay Mallya-promoted United Spirits.
SBI is the lead bank of a consortium of 17 lending institutions that have extended Rs 7,000-crore loans to the now grounded Kingfisher Airlines. It has an exposure of Rs 1,500 crore to the carrier, which has not been serviced since January.
Bankers expect KFA to atleast repay the loans in dribs and drabs just as it is paying off dues to authorities such as the Service Tax Department and the Airports Authority of India.
“The outcome of the meeting was positive,” said a senior Central Bank of India official.
In their presentation to the bankers, the airline authorities indicated that they will be able to ramp up operations to 21 aircraft within a couple of months of getting DGCA permission to fly, said a senior banker.
Recently, the airline’s promoter, Vijay Mallya, met the DGCA and indicated that an investor is likely to be announced before December 31 when the licence comes up for renewal.