The State Bank of India (SBI), the prime lender to the debt-stricken Indian private air carrier Kingfisher Airlines, said Tuesday that a full recovery of its loans might not happen immediately. The ailing airliner owes $1.4 billion in loans to 17 plus lenders, who have asked the company to infuse fresh capital.
It is looking difficult unless they get fresh equity, said Pratip Chaudhuri, chairman of the SBI, on the sidelines of a media event in Sydney, Reuters reported.
The consortium of lenders of the cash-strapped airlines Thursday had given it 15 days' time to come up with concrete steps to improve operations. The lenders had also asked the airlines to sell its properties in Goa and Mumbai to pay off the debts and had appointed HDFC Securities to value the two properties, which are worth about Rs. 1200 million.
We have told Mallya either he has to get equity or pump in money from his liquor business, said Chaudhuri.
The airliner, controlled by the liquor baron Vijay Mallya and named after his flagship beer brand Kingfisher, is resisting the lenders' plan to liquidate the two assets.
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Contradicting the reports that lenders had asked it to sell the assets, Kingfisher Airlines said in a statement, on our own accord, we approached the banks with a proposal to liquidate this unutilized asset and at today's meeting we raised the issue of this pending approval.
However, within hours, the company retracted its statement and sought permission to remove the Kingfisher Villa in Goa and the Kingfisher House in Mumbai from the security package by making a payment of the full value assigned to these properties, an NDTV report said.
Kingfisher has been trying to raise funds to stay afloat in the business as the mounting debt has pushed it to near bankruptcy. However, the lenders' consortium, led by the SBI, has refused to bail out the airliner unless its promoters agree to bring in fresh capital of Rs 20 billion.
Seventeen lenders hold 20 percent stake in the airline which has a debt burden of $1.35 billion, as of March end. Last week, the ICICI bank, the second largest lender to the airline, offloaded its entire debt in Kingfisher, amounting to Rs. 4.30 billion, to a debt fund promoted by SREI Infrastructure Finance.
Kingfisher Pilots' Strike
Dealing another blow to the embattled carrier, a section of its pilots went on a strike Tuesday over non-payment of salaries, leading to cancellation of five flights since Tuesday morning.
A section of the airline's pilots, mainly operating ATRs, did not report for duty on the salary payment issue. Owing to the agitation, the airline has cancelled five flights as we could not get pilots to operate the aircraft, the officials said according to a TNN report.
The salaries and other dues of the Kingfisher employees are pending for the past five months and the employees went on a strike on more than one occasion in the past two months demanding their pay.