The Hindu Business Line : Kingfisher in talks for more bank funding

Bangalore, Dec.22 Kingfisher Airlines has approached a consortium of banks for funds to bail out the airline even as it has drawn about 80 per cent of the Rs 1,000-crore loan it received from ICICI Bank early this year.

A top official with the UB Group, which owns the airline, told Business Line that it has informed the consortium that it will require funding till March 2010. He did not specify the amount of loan it has sought from the consortium.

The airline increased its borrowing limit recently to Rs 7,500 crore. It had earlier indicated that it wants to raise about $400 million. But under the current circumstances, the airline may need to borrow more now. “It (funds) should definitely help the airline to cross over the hump,” the official said.

Sources in the airline say that the airline’s management expects some positive response from its recent lobbying with the government over lifting the ban on allowing foreign airlines to buy stake in domestic airlines.

Sources pointed out that with the Government allowing 100 per cent foreign direct investment in setting up airports, it should allow domestic airlines too to source funds from foreign airlines. With most countries adopting an ‘open sky’ policy as well, there has been a significant change in the flight pattern as well as the concept of bilaterals.

No cut in fares now

Meanwhile, the airline has said that it will not reduce its fares despite decrease in aviation turbine fuel prices. “The sharp and continuous spike in ATF prices earlier in the year has left a lasting impact on the bottom lines of airline companies, leading to an accumulation of huge outstanding and liabilities with oil companies, and the like. As such, keeping in mind the cash flow needs to settle these accumulated liabilities, there is currently no case for reduction of fares,” an airline spokesperson said.

He said once the government brings ATF under the declared goods’ category, Kingfisher Airlines will immediately and significantly reduce fares.

For the nine-month period ending March 31, 2008, the airline’s net loss came down by 24 per cent to Rs 188 crore. Its total income has also reduced 5 per cent to Rs 1,545.50 crore for the same period because it booked lesser profits from the sale of aircraft purchase rights.

More Stories on : Airlines | Outlook

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page