Kingfisher closes in on $370m injection

Owner Vijay Mallya confirmed to The Financial Times that India's second-largest airline would receive a short-term loan of $118 million from a group of 14 banks led by State Bank of India to be used as working capital. He was also in late-stage negotiations with an unnamed domestic financier looking to provide a $250 million equity injection.

The supposed deal comes a week after Kingfisher's promoters said they would consider reducing their stake in the airline from 58.61% to 26% in order to boost working capital and lower interest payments on Kingfisher's $1.3 billion debt, which has risen to 14% from 11% last year. Kingfisher is also struggling with a 70% year-on-year rise in fuel prices.

Kingfisher customers were alerted to its financial troubles last week after the airline cancelled approximately 80 flights. It announced that it hopes to restore its normal flight patterns over the next three to four months.

Mallaya averred to The Wall Street Journal that the airline has time on its side, as it doesn't have to pay interest to its banks until 2013, and its interest payments can be made over nine years.

Kingfisher Airlines is owned by United Breweries, which owns Kingfisher Beers, headed by Mallaya, who also owns a Formula One racing team.

Despite Kingfisher's woes, the airline reported a rise in second-quarter sales by 10% to INR15.28 billion ($296.6 million), compared to the previous year. However, it did report net loss of INR4.69 billion, up from INR2.31 billion in 2010.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Infrastructure
• Credit/Special Situations
• India
• Distress
• Infrastructure