No bailout package for Kingfisher: Govt

Written by Sitanshu Swain | Agencies | Mumbai/New Delhi | Updated: Nov 13 2011, 10:08am hrs
Refusing to provide any financial support to Vijay Mallyas financially beleaguered Kingfisher Airlines immediately, a consortium of a dozen banks, led by the State Bank of India (SBI), has asked the promoter to bring in more equity into the company.

The consortium, which held an emergency meeting in Bangalore on Saturday to take stock of Kingfisher's financial situation, bluntly informed the company that they would not be able to extend any financial support to the company without this additional equity.

This is a prerequisite, the consortium said, before they offer any additional debt to Kingfisher.

Meanwhile, civil aviation minister Vayalar Ravi also clarified in New Delhi that there was no bailout package for Kingfisher. This is to clarify that no bailout package is pending before the government nor has been proposed by the civil aviation ministry for Kingfisher Airlines, Ravi said in a statement.

This clarification comes against a backdrop of Opposition flak over his statement on Friday that he would talk to the finance ministry to see whether banks and oil firms could provide some relief to the cash-strapped airline.

In Bangalore, the consortium of banks has formed a monitoring committee, consisting of the State Bank of India, Punjab National Bank (PNB), Bank of Baroda (BoB) and Bank of India (BoI), to keep regular tab on the airlines operations.

We have asked them to provide regular information to the committee about Kingfishers financial and other important facts to the committee, said a senior SBI official.

Banks that participated in Saturdays meeting included SBI, ICICI Bank, Punjab National Bank (PNB), Bank of Baroda (BoB), IDBI Bank, Indian Overseas Bank, Corporation Bank and Canara Bank.

The banks total exposure to Kingfisher is over R7,000 crore, of which around R4,000 crore is in the form of term loans. Kingfisher immediately has to pay R1,200 crore to its vendors and key lessors to keep its aircraft flying.

The Kingfisher board is meeting on Monday to discuss the latest situation and provide viable proposals to the banks.

Kingfisher Airlines has also sent an email to its frequent flyer club members to explain reasons for cancellation of numerous flights, asserting the move was necessary to reconfigure its aircraft to focus on the full-service market. The email said news reports of flights being cancelled owing to supposed exodus of pilots were falsified.

Meanwhile, aviation regulator DGCA has asked Kingfisher Airlines to give details of their plan to reconfigure its fleet to prevent large-scale flight disruption.

The DGCA has sent similar notices to IndiGo and SpiceJet also and asked them to submit their cancellation details. When the schedule for winter was approved, it was with immediate effect. So we took a stock of the position and on that basis, we asked them to explain, DGCA chief EK Bharat Bhushan said.