Kingfisher urges banks to reduce interest rates
New Delhi: Kingfisher Airlines chief Vijay Mallya today said the company was negotiating with banks to reduce the high interest rates on its Rs 6,000 crore debt but maintained the air carrier was not suffering from a "huge" debt burden.
"We are flying. But we have to repay our debt. I can tell you we are not suffering from a huge debt burden. We have nine years to repay this debt," the Kingfisher chief said on the sidelines of a CII function on civil aviation here. However, he said the interest costs were "getting higher and obviously we are trying to reduce these costs".
Kingfisher officials have said they were trying to bring down the debt substantially in a short-term and negotiations were currently on with bankers in this regard. As per latest figures, the airline has a debt burden of Rs 6,007.30 crore. Over 23 per cent of Kingfisher stake is now owned by a consortium of 13 banks, including SBI, ICICI Bank, IDBI Bank, Bank of Baroda and Punjab National Bank.
At the Group`s annual general meeting last month, Mallya had told shareholders that Kingfisher had implemented a debt-recast package in the last financial year, following which loans from bankers in excess of Rs 1,300 crore and funds from promoters of approximately Rs 745 crore were converted into share capital.
Further, the interest rate on the recast loans was lowered to 11 per cent and the period of repayment was extended to nine years.On oil companies stopping jet fuel supplies due to non-payment of dues, he said, "We are in compliance with the agreed payment arrangements with them."
Regarding Kingfisher`s decision to do away with the Kingfisher Red brand and reconfigure the single-class aircraft into dual-class ones, the airline chief said the process would take three months."We have been experiencing a strong growth and better yields on our full-service brand," Mallya said.
Kingfisher had announced at the AGM that it would begin reconfiguration of seating plans of its aircraft by having uniform cabins. It would reduce the number of business class seats in its existing dual-class planes and introduce some business class seats in the all-economy aircraft.
In the process, the airline would add more than 10 per cent capacity to its network without any cost of acquiring an aircraft, its officials had said. Asked about his stand on allowing FDI by foreign airlines in the Indian carriers, he said, "We have always been in favour of FDI by airlines. Government should encourage such FDI, but taking a decision on such policy matters is the government`s prerogative".