Loan for Kingfisher Airlines awaits study: Sources

MUMBAI: Lenders to cash-strapped Kingfisher Airlines, which has been grounding planes and cutting routes to stay aloft, are awaiting a report on the airline's viability before they approve a $133 million loan, banking sources said on Monday.SBI Capital Markets Ltd, a unit of State Bank of India, has been hired by the banking consortium to draft a report on the carrier's financial outlook.

That report has yet to be submitted, two sources with direct knowledge of the matter said.

The chairman of State Bank of India, the biggest lender to Kingfisher, said the banks were looking for a solution.

"We are trying to help Kingfisher," Pratip Choudhuri told Reuters on Monday morning.Asked if the banks were open to lending more to the airline, he said: "Everything is on the table".

Kingfisher shares rose more than 2 percent on the comments before closing up 0.23 percent at 21.75 rupees. The airline's shares have fallen about 67 percent since the start of the year, cutting its market value to about $200 million.

While there is no deadline for the viability report, banks have asked SBI Capital to work "expeditiously", one source said.

Kingfisher, controlled by flamboyant liquor tycoon Vijay Mallya, has been seeking additional short-term working capital loans of about 7 billion rupees ($133 million) to fund operations. The airline has also been looking to raise equity.

"Banks have re-iterated that any additional funds will only be considered once the viability report is before them and if banks are convinced about it," the source added.

The airline, which has a negative net worth, aims to halve its debt to about 37 billion rupees through the sale and lease-back of aircraft, sale of a property in Mumbai, and conversion of rupee loans into lower-interest foreign loans.

Conglomerate Sahara India, which co-owns Formula One motor racing team Sahara Force India along with Mallya, plans to lend it more than $47 million, a source familiar with the matter said.

The airline announced on Monday it would become part of the global oneworld alliance from February, which it said would help it improve its competitive offering and financial position.

TURBULENT TIMES Kingfisher has not made a profit since it was set up in 2005 It has recently slipped to third place in market share in India after being overtaken by IndiGo, India's only profitable airline, as it cuts flights on loss-making routes.

Over 100 pilots have quit recently and suppliers, including airports and oil companies, have stopped extending credit.

A Kingfisher executive, who declined to be identified, told Reuters the airline had grounded 15 planes, but declined to say why or how long the planes had been grounded.

The Economic Times reported earlier that Kingfisher had grounded some of its Airbus planes, including the wide-bodied A330s used for international routes, because it was unable to meet maintenance and overhaul expenses.

Article Source: http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/loan-for-kingfisher-airlines-awaits-study-sources/articleshow/11168374.cms