Kingfisher board to chalk out rescue plan

[1]

Cash-strapped Kingfisher Airlines' board is to meet here again on Tuesday, after their Monday meet was inconclusive in chalking out a rescue plan for the carrier as it continued to cancel many of its daily flights while struggling with a pilot exodus and huge debts.

"The board meeting which was held today was inconclusive," a company official said on the meet which was held to discuss the July-September quarter performance and on the issue of infusing fresh capital in the company.

According to the official, the board will meet again on Tuesday after the carrier's chief executive and chief financial officers meet with the company's lenders here.

"It (board) will meet again tomorrow after the company's chief executive and chief financial officers interact with the bankers," the official said.

Senior company officials will also address the media on Tuesday to announce the company's second quarter results.

The board meeting came in the backdrop of increasing anxieties about the financial health of the airline. The country's stock markets, vendors and lenders would also be keeping a close watch on the company's quarterly results.

The board meeting was expected to come out with a framework on cash infusion into the airline, as well as cutting some of the Rs.7,000 crore debt.

News of the company planning to cut costs and infuse capital buoyed trading sentiments and the airlines' scrip at the Bombay Stock Exchange (BSE) touched the high of Rs.21.65 before closing at Rs.21.35, up 8.63 percent for the day.

Earlier, the company's stock at the BSE declined over 19 per cent Friday to a new low of Rs.17.55. It, however, pared some of the losses and closed the day at Rs.19.65, down 9.45 per cent.

The company's lenders said that they would hold a meeting with the airline, which they have asked to come up with more funds for them to consider restructuring of the company's loans.

"We have asked them to come up with some fresh funds. Thing that is being discussed is selling some of the assets. If they do it, it is good," Hemant Contractor, managing director, State Bank of India, told reporters on the sidelines of a World Economic Forum (WEF) being held here.

Contractor added that: "We (banks) have to be satisfied about viability of Kingfisher. There is no point in restructuring (debt), if the company's operations are not going to be viable."

The SBI leads the consortium of 13 banks which has lent to the airline. SBI is also the biggest lender to Kingfisher with loans of Rs.1,500 crore. Private lender ICICI Bank has also given loans of up to Rs.400 crore to the company.

The SBI's chairman Pratip Chaudhuri said: "We have had a meeting with Kingfisher and we will hold a meeting on Tuesday. We have asked them to furnish details about the condition of their fleet. We are committed to helping Kingfisher and they are a valued customer."

Meanwhile, the company's promoter Vijay Mallya said that the company has not asked for any kind of financial bailout from the government, but is only looking for working capital management assistance.

"Why do you say bailout? There's no bailout involving taxpayers' money. We want working capital management assistance," Mallya posted on micro-blogging site Twitter on Monday.

Mallya, however, welcomed the statement by Prime Minister Manmohan Singh on Saturday that the government will find ways to help the airline and that he will meet the Civil Aviation Minister Vayalar Ravi on the matter.

"The honourable PM is an economist and understands the importance of connectivity that goes together with economic growth," Mallya tweeted.

The latest developments come after the airline curtailed 40 flights every day since November 9 - a move, the company said, taken to rationalise route plans and improve yields.

Currently, the airline also owes huge amounts to oil companies, the Airports Authority of India and private airport operators GVK and GMR groups. The airline has not posted any profit since its launch five years ago, and reported a net loss of Rs.1,027 crore last fiscal and Rs.263 crore in the last quarter.