Mallya looks for partner to keep Kingfisher afloat

Says airline is viable and he can bring in cash if the banks want

“Please don’t write Kingfisher’s epitaph everyday. We shall survive and flourish and prove you all wrong,” Mallya told  mediapersons who were made to wait in a conference hall in the suburb of Mumbai for an hour and 35 minutes on Tuesday.

Stating that an Indian business house has expressed interests to invest in the company to become a strategic partner, Mallya made it clear that he has no plans to sell his group’s 56 per cent stake in the company.

Asked about how much stake will be offered to the partner, Mallya said it is premature to discuss all these as everything will depend on the valuation and the share premium the company can fetch.

Mallya, who is also keen to get a foreign airline as an equity partner, appealed to the government to change its policy to allow foreign airlines pick up stakes in Indian aviation companies.

 “It makes no sense. When the government allows 100 per  cent FDI (foreign direct investment) in airport companies, why should airlines be discriminated against?” Mallya asked.

Currently, the government allows only non-airline foreign companies to invest in Indian aviation companies up to a limit of 49 per cent.

According to Mallya, given the huge future potential in the fast growing Indian aviation market, foreign airlines will surely be interested in coming here.

Flanked by his top officials Kingfisher MD Rajiv Agarwal and CFO Ravi Nedungadi, Mallya dismissed all speculation over the possible closure of his company.

A spate of flight cancellations — needed for the planned re-configuration exercise of the wide body aircraft — had brought focus to the company's deep financial crisis, Mallya said.
“We cancelled the flights not because we could not afford to fly. The cancellation has been blamed on wrong reasons. It was only a commercially prudent decision to reconfigure aircraft ready for full-service operation as opposed to lost cost carrier (LCC),” Mallya said.

He once again blamed the obligation to fly in heavily loss-making destinations as one of the reasons for Kingfisher’s plight. The company on Tuesday reported its net loss to Rs 468 crore in the June-September 2011 quarter.

For a change, Mallya also admitted that the re-configuration exercise could have been better handled to avoid so many flight cancellations and also regretted for not adequately communicating customers about it through the media.

While explaining reasons for the huge losses, he pointed out that the entire industry is working in a tough environment where heavily taxed fuel account for nearly half the cost and yield per seat is falling.

Again, quiet unlike him, Mallya was calm and composed in taking all questions and in explaining the steps being taken to turnaround Kingfisher.

It is better to focus on the full-service operations rather than no frill, he said. While the cost difference is insignificant, customers prefer full-service operations.

Mallya also denied that he ever sought any bailout from the government. All that he needed was an increase in working capital limit by around Rs 600 crore to Rs 700 crore and reduction of interest cost burden. “We have not asked (banks) for concessions, but more working capital,” he said.

As the State Bank of India Capital is assessing the working capital need, the company is awaiting the banks to open their purse strings.

In this context, Nedungadi pointed out that in the curr­ent year, the promoters have already pumped in Rs 780 crore as debt and are ready to bring in more money if the banks ask for.  Contrary to re­ports of the imminent stoppage of fuel supply beca­use of large dues to oil companies, Mallya clarified that Kingfisher does not owe any mo­ney to Indian Oil and Hin­dustan Petroleum Corporation Ltd.

To its bigger supplier Bh­arat Petroleum Corporation Limited, it owes only Rs 40 crore after bringing down the credit limits from earlier Rs 600 crore.