LENDERS to India’s Kingfisher Airlines have not agreed to extend further loans to the debt-crippled carrier, three banking sources said today after reports that one state-owned creditor had agreed on a bailout loan package.
Several newspapers reported that State Bank of India (SBI) had agreed to throw a lifeline to Kingfisher, which is majority owned by liquor baron Vijay Mallya, giving figures ranging from 2.0 to 16.5 billion rupees ($40m/£25.36m-$335m/£212.45m).
But banking sources told reporters the airline’s consortium of 16 lenders, which includes SBI, were still studying a debt-restructuring proposal put forward last week.
“I don’t think any individual bank can take a decision,” said a source at the Punjab National Bank, India’s second-largest public sector lender. “It will have to be decided by the consortium.”
“We have to study the proposal, seek clarifications and then take a call individually,” said another source at IDBI Bank.
SBI’s chief financial officer, Diwakar Gupta, declined to comment.
Desperately strapped for cash, Kingfisher Airlines stands on the brink of collapse after nearly a week of flight cancellations and the resignation of dozens of its pilots.
India’s second-largest airline until this year, Kingfisher has not turned a profit since it was founded in 2005 and is now carrying a debt burden of $1.3bn (£824m).
Its revenue has been in decline since the end of last year and now, staff are not being paid and tax bills remain outstanding. A tax official said the airline’s tax arrears for financial 2011/12 was around 400 million rupees ($8.1m/£5.13m).
Mallya has blamed his cash crunch on the tax authorities, which last week froze Kingfisher’s bank accounts over its unpaid dues. Finance secretary RS Gujral denied media reports that the accounts had been blocked.
Civil Aviation Minister Ajit Singh said Kingfisher Airlines could not expect the government to pull it back from the brink, as it did for state-owned Air India.
“The government is not going to bail it out, but we hope Kingfisher can mobilise its resources somehow because if they don’t then there will be more problems for the passengers,” he told reporters.
“We have made it very clear, and I’m sure Mr Mallya knows that Air India is a government concern. Whatever help we give them, we cannot do it to any private industry. If the banks can loan them money, then it’s all good.”
