Bankers oppose Kingfisher's revival plan
A consortium of lenders, led by State Bank of India, today opposed ailing Kingfisher Airlines' plan to resume operations and insisted on "better commitments" from the carrier.
The meeting between lenders and the KFA management here remained inconclusive as the bankers were "not impressed" with the revival plan, sources said.
The Kingfisher Airlines management submitted almost the same revival plan which was given to DGCA last month and this plan was not acceptable to most of members of the consortium, sources added.
The Directorate General of Civil Aviation (DGCA) has already stated it will hold talks with Kingfisher's creditors and airport operators before deciding on its application seeking permission to re-launch its services.
At the meeting held here, Kingfisher submitted that the parent UB Group will infuse Rs 650 crore capital in the airline company over the next 12 months. However, sources said, lenders rejected this proposal and agreed to hold another meeting with the management of Kingfisher Airlines next week or before January 18 to work out "a more acceptable solution".
The next meeting will be held in Mumbai where lenders are likely to push for better commitment from Kingfisher Airlines, sources added. SBI is the lead banker in the 17-lender consortium that extended Rs 7,000 crore loans to the now grounded Kingfisher Airlines. SBI alone has an exposure of Rs 1,500 crore to the carrier, which has not been serviced since January, 2012.
As per the revival plan submitted to DGCA last month, Kingfisher had said it would require about Rs 652 crore over the next 12 months for running its operations. These funds would come from the UB Group's resources as banks were unwilling to fund the cash-strapped airline.
Out of the Rs 652 crore that the airline would need to restart operations, Rs 120 crore would be needed to meet salary arrears for its employees. Kingfisher Airlines CEO is understood to have informed DGCA that the salary dues would be cleared by giving two months' wages and back wages each month from the next month onwards.
In addition, funds would be required to refurbish the aircraft, including their engines. The airline's pilots would also have to undergo refresher training and medical tests before they can start operating flights again.
Kingfisher officials claimed that there were no dues against oil companies, barring interest payments due to HPCL. The airline would have to meet the dues it owe to airport operators, including the Airports Authority of India (AAI) to which it has an outstanding of over Rs 250 crore.