‘Vijay Mallya failed to spell out a concrete revival plan’

Stock of debt-ridden Kingfisher Airlines plunged on the bourses after bankers turned down the company's request for a loan of Rs 200 crore. Shares in the company hit the lower circuit and closed at Rs 16.12, down 4.95 per cent on the BSE. The stock, however, gained close to 90 per cent in just one month time on expectation of debt restructuring.

On Thursday, the BSE halved the permissible stock movement to five per cent for the Kingfisher Airlines stock.

Earlier, the scrip was allowed a movement of 10 per cent. Exchanges usually lower the circuit-filter to avoid excessive movement in the stock.

According to lenders, the promoter and chairman of Kingfisher Airlines Vijay Mallya failed to spell out a concrete revival plan on equity infusion into his airline, reeling under debt of about Rs 9,000 crore.

Aid till next meet

The next meeting between the lenders and airline management will be held in the third week of October. A “basic operating plan” has been asked to be prepared by investment bank SBI Capital Markets Ltd for the airline to stay afloat till the next lenders’ meet. This is the third time that SBI Capital has been asked to prepare a rejig exercise for the airline. Banks together have an exposure of nearly Rs 7,000 crore in the airline.

With a fleet size down to seven, the airline is currently operating on curtailed capacity and has suspended its international operations. The Director General of Civil Aviation said recently that DGCA will look into the cancellations of KFA flights in the upcoming winter schedule in October. “We will take into account the capacity of airlines to operate according to the schedule,” said Arun Mishra, DGCA.

Priya.s@thehindu.co.in

Nivedita.ganguly@thehindu.co.in

(This article was published on September 28, 2012)
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