Kingfisher considers needed rescue package

by William ASTON on November 15, 2011

The beleaguered Kingfisher Airlines is currently considering proposals, which includes selling property, in an attempt to cut its debt of $1.3bn by more than 50 per cent, according to officials.

Kingfisher’s board will hold a meeting today in order to finalise quarterly results. Sources suggest that they are considering the conversion of loans from the parent company that owns it into equity while changing aircraft leasing terms.

Creditors have demanded that the company raises $159m in equity for its debts to be restructured. Hermant Contractor, the State Bank of India’s Managing Director, said that Kingfisher must have a credible business plan laid out before any kind of restructuring takes place.

Over the past 10 days, scores of flights have had to be cancelled as shares hit new lows in the midst of ongoing debt fears. At present, India’s second-largest airline is in around $1.2billion’s worth of debt.

Should they be approved, the proposals are going to help the company get badly needed loans from banks to run its operations. Vijay Mallya, the part-owner and founder of the airline, insists that his carrier won’t close and is merely cutting its losses through the rationalisation of flights.

Shares in Kingfisher increased by 7.6 per cent yesterday in Mumbai after falls of as much as 18 per cent before the start of the weekend. Correspondents have commented that the airliner is now one of the industry’s most noticeable casualties of extortionate high fuel costs.

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