Banks give Kingfisher 15 days to come up with revival plan

Bankers have decided to sell non-core assets of Kingfisher Airlines that include Kingfisher House in Mumbai and a villa in Goa belonging to Mr Vijay Mallya.

BL :Nivedita ganguly :MUMBAI, JULY 5: 2012

Banks have told Kingfisher Airlines to come up with a concrete action plan to improve its 

operations within a fortnight. Currently, the private carrier’s operations are hobbled. Its fleet 

strength has dropped to 13 from 64 last November.

Bankers say that given its current fleet strength and truncated operations schedule, the 

beleaguered airline cannot be turned around.With the debt-laden airline reportedly defaulting 

on lease rentals of over Rs 1,000 crore, lessors recently repossessed 34 aircraft.

While the airline promoter is banking on the proposed liberalisation in foreign direct investment 

in the aviation sector, bankers’ patience appears to be wearing thin. Debtor-creditor meetings 

held so far have not yielded any result.

SMALL DENT IN DEBT

The airline has been asked to put non-core assets — Kingfisher House in Mumbai and the 

promoter’s villa in Goa — on the block. This will lighten its debt burden, but only a tad.

Pointing out that the airline’s assets will barely cover 10 per cent of the Rs 7,000 crore,it owes 

a consortium of 17 banks, a senior public sector bank official said if banks precipitate action 

then the corporate guarantee and promoter guarantee for loans taken could be invoked.

However, the cash-strapped airline, in a statement, said the meeting with the consortium of 

bankers was scheduled as an “update meeting” and there was “no discussion on 

commencement of recovery proceedings”.

“Kingfisher House has been lying vacant after the staff moved to our new offices at The Qube in 

Mumbai, and even at that time, on our own accord, we approached the banks with a proposal 

to liquidate this unutilised asset. At today’s meeting, we raised the issue of this pending 

approval,” the KFA spokesperson said.

Kingfisher House was the airline’s corporate headquarters till it decided to put the building on 

the block to raise funds. The airline is planning to raise between Rs 90-100 crore selling this 

building.

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In late-September last year, Mr Vijay Mallya, Chairman of UB Group, said the company had 

moved into a new building in Mumbai and that Kingfisher House was redundant. “So, we will 

obviously look to sell it. Any initiative that we can take to reduce our debt is going to be 

pursued,” he had said then.

KFA saw its domestic market share fall from second to the last in just six months.

Global airline consultancy firm Centre for Asia Pacific Aviation (CAPA) estimates that 

Kingfisher Airlines has a funding requirement of close to $1 billion, of which $500-600 million is

 needed immediately. CAPA estimates an additional funding requirement of $300-400 million 

in the next fiscal.