SHARES in India’s debt-laden Kingfisher Airlines rose five per cent on Tuesday (February 19) after its parent firm United Breweries said it would raise the sum it can lend to the carrier, which is desperate for cash.
Kingfisher, controlled by Indian liquor baron Vijay Mallya, rose five per cent – the maximum daily limit – to trade at 10.53 rupees ($0.19/£0.12).
The rise came a day after the UB Group said it would more than double its cap on loans for Kingfisher to 7.5 billion rupees ($136m/£88.11m) from three billion rupees ($55.39m/£35.88m) earlier – a step that needs shareholder approval.
Kingfisher has been heading for collapse since its lenders last week said they planned to recover $1.5bn (£971m) worth of loans given to the airline, as it has failed to produce a convincing business plan.
The airline, whose planes have been grounded since October, has never made a profit since it began flying in 2005. It owes vast sums to banks, airports, fuel suppliers and its staff.
Kingfisher has a number of real estate assets that it put up as collateral against its loans, including its office in financial hub Mumbai. But most of its planes were on lease and lessors have taken them back, analysts said.
The airline, which has said it aims to be ready to resume operations when the summer travel season gets underway in April, posted a net loss of 7.55 billion rupees ($142m/£92.00m) in the three months to December.
Meanwhile, reports Kingfisher also began paying back wages to some of its employees, which added the airline has not been paying salary to its employees since last May.
The news agency reported that airline chief executive Sanjay Agarwal was in the Indian capital to meet regulators to make a fresh pitch to restart operations.
