Banks give Kingfisher Airlines 15 days for revival plan

Jul 05, 2012 |

Reuters

mumbai

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Lenders to Kingfisher Airlines have given the beleaguered airline 15 days to come up with 'concrete steps' to improve its operations, a senior executive at its lead bank said on Thursday.

Kingfisher, controlled by liquor baron Vijay Mallya, has never made a profit in a struggling Indian airline industry and has seen its domestic market share fall from second to last among the country's six big carriers after grounding most of its fleet.

"They have to give us a report on what steps they have taken so far, what challenges they are facing," an executive with State Bank of India said after meetings between the airline and banks on Thursday.

SBI is the leader of a consortium of lenders to Kingfisher, which had $1.4 billion in debt at the end of March.

"They will have to come up with concrete steps to improve operations in 15 days, otherwise we will have to take some other actions," said the banker, who declined to be named or give specifics.

The executive also said banks expected to recover about $25 million from the sale of Kingfisher properties in Mumbai and Goa.

"We told them you have to put these on the block and they have agreed," the SBI executive said, referring to the Mumbai and Goa properties. "There is no point in keeping non-core, unused assets."

He said the proposal to sell the two properties was made about seven to eight months ago.

Kingfisher said in a statement that it is 'patently wrong and false to claim or state that banks have started recovery proceedings' and said there was no such discussion at Thursday's meeting.

Kingfisher House in Mumbai has been vacant after staff moved to new offices, the company said.

"At that time itself, on our own accord, we approached the banks with a proposal to liquidate this unutilised asset and at today's meeting we raised the issue of this pending approval," it said in a statement.

Earlier this week, bankers told Reuters they were losing hope the carrier would be able to bring in an outside investment anytime soon and may sell assets held against their loans.

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