Bankers oppose Kingfisher’s revival plan

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Sanjay Aggarwal, CEO of Kingfisher Airlines coming out after meeting with Director General of Civil Aviation in the Capital. (file photo)
Sanjay Aggarwal, CEO of Kingfisher Airlines coming out after meeting with Director General of Civil Aviation in the Capital. (file photo)

A consortium of lenders, led by State Bank of India, today opposed ailing Kingfisher Airlines’ plan to resume operations and insisted on “better commitments” from the carrier.

The meeting between lenders and the KFA management here remained inconclusive as the bankers were “not impressed” with the revival plan, sources said.

The Kingfisher Airlines management submitted almost the same revival plan which was given to DGCA last month and this plan was not acceptable to most of members of the consortium, sources added.

The Directorate General of Civil Aviation (DGCA) has already stated it will hold talks with Kingfisher’s creditors and airport operators before deciding on its application seeking permission to re-launch its services.

At the meeting held here, Kingfisher submitted that the parent UB Group will infuse Rs 650 crore capital in the airline company over the next 12 months.

However, sources said, lenders rejected this proposal and agreed to hold another meeting with the management of Kingfisher Airlines next week or before January 18 to work out “a more acceptable solution”.

The next meeting will be held in Mumbai where lenders are likely to push for better commitment from Kingfisher Airlines, sources added.

SBI is the lead banker in the 17-lender consortium that extended Rs 7,000 crore loans to the now grounded Kingfisher Airlines. SBI alone has an exposure of Rs 1,500 crore to the carrier, which has not been serviced since January, 2012.

As per the revival plan submitted to DGCA last month, Kingfisher had said it would require about Rs 652 crore over the next 12 months for running its operations.

These funds would come from the UB Group’s resources as banks were unwilling to fund the cash-strapped airline.

(This article was published on January 4, 2013)
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