The civil aviation ministry has sought the finance ministry's help in reviving Kingfisher Airlines, raising the possibility of the government stepping in to solve the gravest crisis faced by the country's second-largest airline till date.
Vayalar Ravi, the civil aviation minister, said on Friday he has asked the finance ministry to tell banks to restructure Kingfisher's debt. "After Mr Mallya spoke to me recently, I spoke to the finance minister three days ago and requested him to talk to the banks which had given loans to airlines and help them restructure their debt, if required," he said. He added that the airlines will have to come up with a proposal for something of this sort to happen.
A possible government intervention through state-owned banks may help Kingfisher tide over one of its biggest problems today - the high interest costs on its 7,057.08 crore of debt. But it is unlikely to solve the problem of shrinking cash flows and inability to raise equity as per a report in ET by Anindya Upadhyay.
On Friday, Kingfisher shares sank to a life low of 17.55 before recovering to end the day at 19.65, down 9.45%. Kingfisher's main shareholders are UB group companies - United Spirits (USL) and United Breweriesand UB Holdings. Late Friday afternoon, speculation mounted over a possible stake sale in USL to global drinks giant Diageo.
Industry sources said Diageo and Vijay Mallya could come together to do a deal enabling the foreign partner to buy a stake in USL while Mallya would get some cash to invest in the airline business. Diageo has apparently sounded out some banks holding USL shares as collateral. But Mallya denied it strongly. "All this is misinformation," he said.
Lenders to Kingfisher, with a combined exposure of around 6,200 crore, are yet to consider any plan to rejig the loans. But conversion of loans into equity or restructuring them - moves that would lower Kingfisher's interest outgo - cannot be ruled out. There was a loan restructuring exercise that took place last December after which the company has not defaulted on interest payment, said a banker.
» Read Complete News.....(You need to login first to read complete news). New User? Register for FREE!
» Back to Travel News