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Spreading wings
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New Delhi, Feb. 19: Moves to restart Kingfisher Airlines appear to have gathered momentum after Vijay Mallya paid the airline’s employees a month’s salary, CEO Sanjay Agarwal met the DGCA head and UB Holdings raised its headroom for loans to the airline by Rs 450 crore.
The cash-strapped airline has disbursed June 2012 salaries to a section of the staff. The monthly salary outgo for the airline is around Rs 20 crore.
Civil aviation minister Ajit Singh had earlier said the carrier needed at least Rs 1,000 crore to resume operations, of which Rs 120 crore would be for salary dues.
The decision to make part payment to staff members comes six days after a consortium of lenders led by the State Bank of India took an in principle decision to recall the loans given to the airline.
However, on a positive note, UB Holdings, the holding company of UB Group, today said it planned to increase its loan limit for the ailing carrier from Rs 300 crore to Rs 750 crore. It has sought approval from its shareholders to revise the lending limit.
The announcement led to a surge in the Kingfisher Airline stock. On the National Stock Exchange, the scrip hit the upper circuit limit and closed at Rs 10.50, which was 5 per cent higher than the previous close of Rs 10.
In 2008, the shareholders of UB Holdings had approved loans of up to Rs 1,500 crore to Kingfisher Airlines. Later in 2010, the company won shareholders’ approval for a revision within this overall limit, pursuant to which the loans for Kingfisher were capped at Rs 300 crore and investments at Rs 1,200 crore.
Meanwhile, sources said the airline’s chief executive officer Sanjay Agarwal was in the capital today to meet Arun Mishra, the director general of civil aviation, to make a fresh request to resume operations.
Aviation analysts said Kingfisher would show these new developments to the DGCA as its way of coming up with a financial turnaround plan and would try to get back its flying licence. Kingfisher lost its scheduled operator permit, or flying licence in December.
The airline, which ceased operations in October last year, reported a loss of Rs 755 crore for the third quarter ended December 31, 2012.
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