Kingfisher, Etihad deny stake sale buzz

Kingfisher, Etihad deny stake sale buzz

Speculation is rife of a stake sale by Kingfisher Airlines (KFA) to United Arab Emirates’ national carrier Etihad Airways, despite both sides denying it, though KFA qualified its version, saying, it is in “discussion with various investors including Etihad Airways.”

KFA added that matters of such equity investments by investors are “merely at negotiation stages.”

In a response to the Bombay Stock Exchange, KFA added that the company “has been attempting to raise much-needed capital over the last two years.”

The Corporate Communications Manager at Etihad Airways, Reem Al Midwahi, said, “It is our policy not to comment on such speculation. If or when we do make further investments of this sort, we will announce them in line with regulatory and commercial requirements.

However, she added, “Etihad Airways has identified equity investments in other airlines as an important evolution of our successful partnership strategy. We see equity as a positive reflection of our partnership approach; we will make such investment where we believe the commercial prospects are strong.”

A media report had put the stake sale at 48 per cent in two tranches and said that the deal will be finalised on December 18, 2012. The speculation was enough to send the share price of KFA to a 52-week high of Rs 15.67 on the BSE on Tuesday.

Meanwhile, KFA’s lenders are set to meet on December 17, 2012, which assumes significance as it comes after its Chairman Vijay Mallya struck a deal with British liquor giant company Diageo Plc on November 9, 2012 to sell stake in group company United Spirits Ltd. Lenders are expected to secure a firm commitment from him regarding capital infusion, as part of a revival plan to repay the Rs 8,000 crore debt owed by KFA. Lenders are likely to insist Mallya to bring a part of the first tranche of the deal amounting to Rs 5,725 crore to KFA.

The cash-strapped airline, whose flying licence was suspended on October 20 after its failure to address safety concerns in the wake of its employees striking work over non-payment of salaries, faces imminent cancellation of licence on December 31 if it fails to come up with a revival plan.

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