Kingfisher Airlines’ lenders hope Mallya will come up with revival plan

Bank consortium to decide future course of action tomorrow

NEW DELHI, DEC. 15: 

Lenders’ to the beleaguered Kingfisher Airlines’ (KFA) are pinning their hopes on the private carrier’s promoter Vijay Mallya coming up with a concrete revival plan for the airline on Monday.

Monday’s meeting of the 17-bank consortium with Vijay Mallya assumes significance as it comes in the backdrop of reports that Abu Dhabi carrier Etihad and KFA promoters have renewed their deal talks.

KFA is expected to make a presentation on the concrete revival plan, if any, formulated as required by the Directorate General of Civil Association (DGCA) or the lenders, banking industry sources said.

In case there is no concrete revival plan, then the lenders will decide on their future course of action on the KFA account on the same day itself, they added.

So far, the public sector lenders, who have an exposure of Rs 7,000 crore, have not initiated any action to recover their dues.

For most banks in the consortium, Kingfisher Airlines is a non performing account.

Also on the agenda of Monday’s meeting at Mumbai are discussions on the SBI Caps report, besides the Knight Frank’s valuation report of Kingfisher Villa at Goa, sources said.

The meeting will also discuss the progress on the settlement of dues to the Airport Authority of India, oil companies, aircraft lessors, Income tax and service tax authorities.

The Government had recently changed the foreign investment norms so as to allow foreign carriers to have up to 49 percent holding in the equity of domestic airlines.

An earlier attempt to restructure Kingfisher Airlines through corporate debt restructuring (CDR) mechanism had failed.

The attempt failed as the promoter could not bring in the desired equity funds for the package to sail through.

Banks will be required to mount another restructuring exercise through CDR cell if the promoter’s new proposition, if any, is acceptable to them, sources said.

With Kingfisher Airlines grounded, the brand value of the airline has also taken a hit. It is unlikely that any sizeable amount would get salvaged if bankers were to initiate recovery action today, sources said.

Kingfisher Airlines’ brand was the main collateral that was used for obtaining working capital funding for the private carrier.

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