Kingfisher Airlines promoters are likely to infuse Rs 425 crore in the carrier to “partially restart” operations, sources told NDTV Profit today.
The airline, which has yet to submit its revival plan, is likely to resume operations with 21 aircraft, they added.
The carrier’s licence, which was suspended by the aviation regulator, the DGCA, is set to expire on December 31.
Lenders to the debt-laden carrier, which met today, have decided to form a small group of bankers to help the airline restart operations, and a part of the Rs 425 crore infusion will come from the proceeds of the Diageo deal. The banks will not infuse additional money in the carrier.
State Bank of India, Punjab National Bank, Bank of Baroda, IDBI, United Bank and Bank of India will comprise the group that will help in financing the carrier.
The airline was also in talks with foreign investors, sources added, without specifying whether it is an airline or a private equity investor.
Kingfisher, once India's second-largest airline by domestic market share, has been grounded by the aviation regulator for its failure to come up with a viable plan of financial and operational revival after a labour unrest in October led to the airline announcing a lockout. For most of this year, the carrier has struggled to pay its staff.
Kingfisher Airlines has an exposure of Rs 7,000 crore exposure to a consortium of 17 banks, led by State Bank of India.
The lenders, which have already classified their loans to the airline as non-performing assets (NPAs), are counting on Mr Mallya to bring in funds along with a concrete revival plan for the carrier.
“Kingfisher is a good company with a high brand value, and lenders are trying to do everything to see that an amicable solution is found,” State Bank of India (SBI) managing director and chief financial officer Diwakar Gupta told reporters earlier this month.
SBI has an exposure of Rs 1,500 crore to the airline, which has not been serviced since January this year. However, the bank remains optimistic that the loan will be repaid.
The state lender had said last week that there is no need for lenders to panic as the cash- strapped airline is looking for a solution to come out of the crisis.
"Kingfisher has been a good airline at some point of time. They are going through their set of problems. And there is no reason for bankers to panic as long as they say that they are looking for a solution.”
According to Shyamal Acharya, deputy managing director of SBI, funds from the deal between United Spirits and Diageo will also be discussed at the meeting. On November 9, the companies jointly announced that Diageo will acquire a controlling 53.4 per cent stake in Vijay Mallya-promoted United Spirits for Rs 11,166 crore (nearly $2 billion).
However, United Breweries group chairman Vijay Mallya had made it clear that the United Spirits deal will have no implications on the Kingfisher situation. After the deal was announced, Mr Mallya said both United Spirits and Kingfisher would be dealt as two separate situations.
Launched in May 2005 with great fanfare, the airline has not reported a profit ever and has bank debts of more than Rs. 7,000 crore and unpaid interest thereon since January apart from over Rs. 1,000 crore in vendor and tax arrears. It also has accumulated losses of nearly Rs. 10,000 crore, apart from the salary dues of the past seven months. The Centre for Asia Pacific Aviation (CAPA) has said a fully funded turnaround for Kingfisher would cost at least $1 billion.
With inputs from agencies