Kingfisher Chairman Mallya met the chairman of India's largest bank SBI to ask for a short-term loan of Rs 400 crore to meet day-to-day expenses, even as leasing companies threatened to repossess 16 aircraft for delay in payment of rentals.
Mallya met Pratip Chaudhuri, chairman of State Bank of India, and top officials of other banks at the SBI headquarters in South Mumbai. Besides the working capital loan, which will be used to meet daily expenses such as salary payments, the chairman asked for letters of credit and guarantees, which would increase the exposure of the banks by Rs 445 crore, to enable the airline to buy fuel, according to people familiar with the matter.
Mallya said his total debt requirement was Rs 2,200 crore. People cognisant of the negotiations said SBI Caps, the merchant banking arm of State Bank of India, will recommend measures that need to be taken to make the airline viable.
"It may take about 15 days for SBI Caps to come up with a viability study and Kingfisher Airlines has made it clear that it needs funding immediately. Therefore, the airlines will have to quickly come up with their plans of infusing equity," said a bank official.
Meanwhile Kingfisher CEO Sanjay Aggarwal, today met Director General of Civil Aviation (DGCA) E K Bharat Bhushan to brief the regulator about the flight curtailment plans of the major domestic carrier.
"Our cancellations range between 50-55 flights a day. There will be no more flight cancellations barring whatever we have already announced," Aggarwal told when asked what they had told the DGCA.
"We will restore all these flights gradually over the next three to four months, starting December," he said, adding that by the next summer, the airline would have an operating schedule like in the past.
The airline has suffered a loss of Rs. 1,027 crore in 2010-11 and has a mounting debt of Rs. 7057.08 crore.
India's struggling Kingfisher Airlines slipped in market share to the third position in October, from second in September, ceding ground to budget airline IndiGo, government data showed.
Kingfisher is unlikely to recover lost ground in coming months because the loss-making carrier has cancelled scores of flights in November, catching both customers and government authorities by surprise and spooking investors.
PTI, ET