Uncertainty over funding for Kingfisher
Notwithstanding reports that the lead banker of the consortium State Bank of India (SBI) has agreed to provide Kingfisher a Rs 1,650 crore (USD 336 million) relief package, the bankers were tight lipped about what they were planning.
However, sources in the consortium said that Kingfisher could look for any fresh loans only if the main promoter United Breweries gets an infusion of fresh equity.
The air carrier is understood to have been told by the bankers that it should get at least 25 per cent of the Rs 3,000 crore loan it is looking for in the form of fresh equity.
The sources said that chairman of the Group Vijay Mallya is not in a position to give any commitment and the bankers will take the next step only on such an assurance.
SBI chairman Pratip Chaudhuri declined to comment on the issue saying client confidentiality prevents him from talking about a particular company.
However, Civil Aviation Minister Ajit Singh said if banks can loan them money "it is all good." "It is between the company and the banks," he told reporters.
Finance Minister Pranab Mukherjee declined to comment on reports of SBI coming out with a bailout saying "as and when events take place you will come to know."
The airlines has a debt of Rs 7,057 crore (USD 1.5 billion) with SBI`s exposure alone placed at Rs 1,500 crore. On reports that it is considering bailout for Kingfisher, SBI shares plunged by 8 per cent in the stock market.
In some interesting comments Reserve Bank of India Deputy Governor K C Chakrabarty said the central bank is not opposed to State Bank of India extending support to the airline if it is a professional decision.
"Banks are commercial entities. If they feel that by supporting a unit, if the unit can survive, they must explore that possibility", he said, adding "banks are risk taking entities".
News reports quoted a senior SBI official denying that the bank had given fresh loans to the airline. Ajit Singh said the government was not for closing down of any airline.
"Closure of any airline will not help either the industry or the passengers. Action against the company does not mean closing down the airline", he said.
But the Civil Aviation Ministry was firm that the safety of passengers would be upper most even when it insists that the airline should continue its operations say, for instance, in north eastern routes.
Meanwhile, in compliance with the directions by the Directorate General of Civil Aviation (DGCA) yesterday, the Kingfisher Airlines, whose services remained affected for the sixth day, today filed a fresh flight schedule with the regulator scaling down its operations to about 170 daily flights with 28 functional aircraft.
The airline submitted a revised winter schedule of flights it would operate till March. This schedule is being examined, DGCA sources said.