Kingfisher Airlines Need Support From Indian Govt.

Vijay Mallya

Kingfisher Airlines chairman Vijay Mallya said on Friday that every government has gone out of the way to support airlines and connectivity. But in India, airlines are overtaxed and overcharged. Vijay Mallya tweeted late Friday night: "Every Government has gone out of the way to support Airlines and connectivity. In India Airlines are over taxed and over charged

With more than Rs. 6,000 crore due to lenders and another Rs. 1,400 crore debt converted into equity (equivalent to Rs. 23.21 per cent stake in Kingfisher Airlines or KFA), the Vijay Mallya-promoted airlines' creditors are staring at potential non-performing assets (NPAs) worth nearly Rs. 7,400 crore.

Leading financial institutions and banks, including SBI, ICICI Bank, IDBI Bank, Bank of India, UCO Bank & Punjab National Bank, have lent money to the ailing KFA over the last five years.

Last year, a consortium of 13 lenders, led by SBI and ICICI Bank, acquired 23.21 per cent stake in KFA, under a debt restructuring plan (conversion of Rs. 1,400 crore debt into equity) at a premium.

"The KFA will need about $ 800 million (Rs. 4,000 crore) to fully fund their business plan over the next two years. Of this, $ 400 million (Rs. 2,000 crore) is required urgently. Funds could be raised through rights issue/ GDR/ QIPs/ converting finance leases into sale lease back and leveraging future aircraft orders," said Kapil Kaul, CEO, South Asia, CAPA. He noted that KFA had to infuse capital to the tune of $ 400 million over the next three months out of which $ 200 million is needed immediately.