Kingfisher’s Vijay Mallya in talks with foreign carriers for possible stake sale

BANGALORE, India – Vijay Mallya, chairman of the beleaguered Kingfisher Airlines (KFA), on Wednesday said he was in talks with foreign carriers for a possible stake sale, amid protests by some shareholders and edginess among bankers over steps to recover their dues.

Lenders are keeping close tabs on progress of FDI talks after the government allowed foreign airlines to buy up to 49% in Indian carriers. A section of lenders is pushing for a quicker decision on the issue, especially because they are losing money every quarter by setting aside funds for potential losses. The bank chief said that the airline had told them several months ago that it was in talks with a foreign carrier but there is little to show by way of movement on the issue.

“Suffice it to say that we are having conversations (with foreign carriers). As for how close we are (to concluding a deal), the policy on FDI in aviation was announced only ten days ago. You can go so fast and not faster,” Mallya told reporters a day before a meeting with bankers.

Mallya needs an investor to turn around the company. Kingfisher Airlines has a debt of nearly Rs 9,000 crore and the company has not been able to pay its employees’ salaries because of widening quarterly losses.

Even the consortium of bankers, who cumulatively have a 24% stake in Kingfisher Airlines, have been pressing Mallya to raise capital through a stake sale in any of the group companies. “We have regular meetings with our banking consortium. I can confirm that there is a meeting tomorrow and we will make a presentation to them as requested,” Mallya said on the sidelines of the annual general meeting of United Breweries, the flagship company of the UB Group.

Later in the day, at the AGM of Kingfisher Airlines, many shareholders vented their frustration. “We need God’s blessings and good luck to save the company,” one shareholder said.

Some others asked Mallya to change the management team of the airline in order to infuse investor and shareholder confidence. “Even if FDI or any other form of investment were to flow into the company, the management needs to change,” said Raghuraman, a Kingfisher Airlines shareholder. He said Mallya did not respond to the issue of management change.

He remained belligerent and told shareholders that it was wrong to say that some domestic airlines were profitable. “Some airlines use international revenue to show profit, while one airline uses the sale and lease back of aircraft every month to show profit,” he said.

Responding to reports that only seven Kingfisher aircraft were flying, Mallya said 15 aircraft were in operation, flying on 80 routes each day. An airline spokesperson told TOI that another 40 aircraft continued to have their air operators permit. During the same period a year ago, the airline had 66 aircraft flying.

Mallya said at the AGM that promoters had infused Rs 1,154 crore into the airline since April 2012. “We don’t know how this money has been utilized though,” a shareholder said.