Kingfisher lenders ask for more details of carrier's strategy

Kingfisher Airlines lenders have asked chairman Vijay Mallya for a presentation on the airline's strategy by the end of September. The lenders have till then put off further lending.

According to sources cited by First Post, lenders are open to selling the non-core assets of the carrier to recover their dues, and the final decision on the issue would be taken after the presentation.

"We have requested a more detailed presentation for us to figure out how their business is moving forward, what is their securities structure and what are the kind of things happening inside the system," a banker told reporters after the meeting of lenders to Kingfisher Airlines.

"Once we understand clearly, which we couldn't today, we could probably take a call," he said, adding, "We have also requested chairman Vijay Mallya himself to come and make a presentation at the next meeting likely this month itself".

As many as 17 banks, led by State Bank of India, have an exposure of over Rs7,000 crore in advances to the carrier, which has not serviced its debt since January and has not paid salaries since March 2012, even as its pilots and engineers have struck several times over the past five months.

The mammoth debt apart, the carrier also has an accumulated loss of over Rs8,000 crore, and has not been able to post a profit since it was founded in May 2005.

Its 2011-12 annual report show that the airline's net loss more than doubled to Rs2,328 crore in 2011-12 from Rs1,027 crore in the previous year and its total long-term borrowings stood at Rs5,695 crore as on 31 March, 2012, while short-term borrowings surged to Rs2,335 crore at the end of 2011-12.

For the loans, the airline has used all its movable assets, trademarks, 'goodwill' of the company and other receivables and a mortgage on Kingfisher House and the meeting assumes significance after last week's report by the industry analyst Centre for Asia Pacific Aviation (CAPA), which cast doubts on the continuation of operations of the airline if it was not able to infuse at $600 million immediately.

"Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and re-organise. A viable turnaround is unrealistic without a significant recapitalisation of the airline," Capa had said. The agency said, restructuring of the airline would require the banks to take a significant hit as they had a huge exposure to the ailing carrier.