Kingfisher imposes FII cap to make room for strategic investor

Kingfisher is saddled with debt of Rs 8,633.1 crore until September 30 and has not flown since October 1. The airline's licence stands suspended but hopes of revival has been raised after reports of Abu Dhabi based Etihad Airways buying into the airline emerged earlier this week.

A Mumbai-based tabloid reported that Etihad and Kingfisher had agreed to a deal which would see the Gulf carrier buy 48% in the airline. In response, Kingfisher said the company was in discussions with various investors including Etihad for investments, but no agreement had been reached.

Industry observers doubt if such a deal would go through. “I don't think any foreign airline would want to invest in Kingfisher Airlines unless promoters bring in at least Rs 4,000-5,000 crore,” said Rashesh Shah, an aviation stock analyst with Mumbai-based brokerage ICICI Securities.

Kapil Kaul, CEO-South Asia at aviation consultancy Centre for Asia Pacific Aviation said Jet Airways would be a better fit for Etihad. “Buying into Kingfisher would be like starting an airline from scratch,” he said Kaul.