Kingfisher seeks switch to foreign currency debt

Our Bureau Bangalore | Updated on March 12, 2018 Published on November 02, 2011

Ravi Nedungadi

Debt-ridden private carrier Kingfisher Airlines has sought assistance from its banks to substitute high-cost rupee borrowings with lower-cost foreign currency debt.

The Vijay-Mallya owned airline hopes to support foreign currency debt by its international operations, which would provide with a natural hedge against currency movement, according to Mr Ravi Nedungadi, President and CFO, UB Group, in a press statement issued by the company.

He said that the company has sought the banks' help to release cash deposits held with lessors against maintenance reserves by providing bank guarantees in lieu.

Kingfisher Airlines has a total debt of Rs 7,000 crore, and currently a consortium of 13 banks, including State Bank of India and ICICI Bank, hold about 23 per cent stake in the company as part of the debt restructuring plans implemented last fiscal.

Mr Nedungadi also said that the company would seek banks' help to “appraise working capital requirements in the usual course to account for changes in the international prices of fuel and the change in rupee-dollar parity”.

He added that the banks were actively considering these requests, and ruled out another debt recast plan.

With the Government favouring 25 per cent foreign direct investment in private airlines, Kingfisher Airlines expects to reduce its debt burden. However, an aviation analyst with a domestic brokerage firm said that even if the company managed to raise funds through stake-sale to foreign investors it would find it difficult to repay its debt.

“Its first priority would be to make payments to employees and towards fuel, and the funds would be insufficient to repay its debt,” he pointed out. With the third quarter, which is supposed to be a good period for the aviation industry, not looking too bright for Kingfisher Airlines, the company could be faced with mounting losses in the coming months, he added.

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Published on November 02, 2011
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