Kingfisher May Get Banks’ Support for Turnaround, Singh Says
Kingfisher Air May Get Banks’ Support for Turnaround
Adeel Halim/Bloomberg
Kingfisher Airlines Ltd. has begun talks with banks as it seeks funds and cuts flights following 16 straight quarterly losses.
Kingfisher Airlines Ltd. has begun talks with banks as it seeks funds and cuts flights following 16 straight quarterly losses. Photographer: Adeel Halim/Bloomberg
Kingfisher Airlines Ltd. (KAIR), the Indian carrier that sought government assistance after losses widened, may find support from banks in its turnaround efforts, said Prime Minister Manmohan Singh.
“If they take corrective measures, I am sure, things should work out,” Singh said in an interview in his office in Parliament House in New Delhi yesterday. “The Indian banking system has a stake in their well-being. With a government nod, things will turn around.”
Kingfisher, controlled by billionaire Vijay Mallya, has begun talks with banks as it seeks funds and cuts flights following 16 straight quarterly losses. The airline has pledged its brand, office furniture and other assets against a debt of about $1.2 billion, as it struggles with fuel costs, a price war and a slumping rupee.
State Bank of India (SBIN), the nation’s largest bank, and other lenders earlier this year converted 13 billion rupees ($241 million) of existing Kingfisher debt into preferred shares. They also granted as much as 12.1 billion rupees of new loans to the Bangalore-based carrier.
The airline fell 2.8 percent to 22.8 rupees at close of trading in Mumbai today. Jet Airways (India) Ltd. (JETIN), the nation’s biggest airline, declined 4.3 percent, while SpiceJet Ltd. (SJET), India’s only listed budget carrier, dropped 5.8 percent. All three stocks have fallen at least 65 percent this year.
Kingfisher and Jet have lost a combined 63 billion rupees in three years as they failed to turn surging travel demand into profit. State-owned Air India has received 32 billion rupees in government bailouts since April 2009 because of losses.
$2.5 Billion Loss
Carriers in India are expected to lose about $2.5 billion in the year ending in March, according to CAPA Centre for Aviation, an industry consultant.
Kingfisher plans to raise about 10 billion rupees in new loans, Ravi Nedungadi, chief financial officer at parent UB Group, said Nov. 15. The company may also sell shares in a rights offer before the end of March and sell property in Mumbai for funds.
The airline has a debt-to-asset ratio of 82 percent, according to data compiled by Bloomberg. Jet Airways’ ratio is 67 percent, while SpiceJet is at 7.7 percent.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net
To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net
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