Kingfisher Airlines welcomes ECB proposal for carriers

Beleaguered carrier Kingfisher Airlines today welcomed the budget proposal for allowing aviation companies to raise capital through External Commercial Borrowings (ECBs) worth $1 billion during the next fiscal.

Kingfisher Airlines chairman Vijay Mallya said, ECBs for working capital were very welcome. He added, interest rates and hedging costs would be much less than Indian rupee denominated costs.

Finance minister Pranab Mukherjee, in his budget speech had acknowledged that the airline industry was passing through a financial crisis due to the high operating costs of the sector driven largely by the steep jet fuel cost (See: ECB for working capital for aviation; 49 % foreign equity under consideration).

Mukherjee also said that a proposal to allow foreign airlines to allow a stake of up to 49-per cent equity in an airline operating scheduled or non-scheduled services, was under active consideration of the government.

Mallya said reacting to the budgets announcement, that permitting foreign airlines to invest up to 49 per cent as and when implemented would be very welcome. He added direct import of fuel was earlier announced, but with it now confirmed, it would greatly reduce net fuel cost.

Meanwhile, the government yesterday came out with announcements of additional fiscal support to national carrier Air India Ltd as also several proposals including clearance to local airlines for easier overseas borrowing, in an effort to prop up a sector that was struck by severe financial turbulence.