New Delhi, Jan. 1: Kingfisher Airlines, which lost its permit yesterday, is unlikely to get it back or find a saviour in Etihad Airways unless it clears its debts.
According to sources privy to the stake-sale talks between Etihad and Kingfisher, the Gulf-based airline has made it clear that it will be interested in a buyout only if the Indian carrier is willing to pay its debts.
Kingfisher owes around Rs 8,000 crore to banks, besides salary arrears to employees and charges to airports, oil marketers and tax departments. Its fleet strength has dwindled and it plans to restart operations with just five Airbus and two ATR turboprop aircraft.
Etihad, which is likely to pick up a 20-26 per cent stake in Jet Airways this month, is not interested in Kingfisher. The Directorate General of Civil Aviation (DGCA) is also not impressed by the beleaguered carrier’s offer to transfer around Rs 650 crore from UB Group and promoter Vijay Mallya’s personal corpus to fund the salary bill, meet the demands of the regulator and restart operations.
“What is required is firm commitments and schedules, backed by rock-solid guarantees, for infusing more funds… which will allow the airline to sustain over time. We don’t want a window-dressed restart, which could sputter and end soon after,” DGCA officials tasked to study Kingfisher’s application, said. “They have failed as yet to give the much-needed details of funding,” the officials added.
Analysts said the consortium of lenders, led by the State Bank of India, had little chances of recovering the debt even if the airline was able to fly again.
This implies that the banks are likely to stay away from any attempts by Kingfisher to return to the skies till UB Group comes up with firm plans.
However, the airline said, “Kingfisher is confident of securing approval from the regulator on the restart plan and renewal of its operating permit.”
Kingfisher’s share in the domestic market has shrunk to just 3.5 per cent, the lowest among half-a-dozen carriers.
Sources said Jet Airways might sell stake to Etihad after the two agreed on the pricing. The sale is likely to be structured through the Isle of Mann, where holding firms own about 80 per cent of Jet’s equity.