Kingfisher to sell 25% stock in anticipation of FDI in aviation

New Delhi: It is returning surplus aircraft and deferring deliveries of new ones to streamline operations.The sale of equity is designed to net strategic investors, though it is subject to an anticipated policy change that the government would allow foreign carriers to pick up equity in Indian airlines.
Yet, this is an indication that the group believes the airline to be worth Rs 8,000 crore, which is nearly 10 times its market capitalisation of around Rs 865.53 crore based on today’s closing price on the Bombay Stock Exchange.These measures were part of a presentation made at a recent investors meet.
Close to 42 per cent of the loans will be securitised through the airline’s cash flows. Experts said this move, along with the financing costs (interest on loans), would virtually mortgage a large part of the earnings of the company.
Company sources said Kingfisher did not plan to take delivery of any wide-body aircraft before 2012, which may be construed as a deferment of international operations, which is where these aircraft are deployed.
The airline, whose operations shrank 21 per cent in the six months to December 2008, is returning nine aircraft to leasing companies, some of which have already been returned.
Kingfisher Airlines posted a loss of Rs 626 crore in the third quarter ended December 31, 2009.
07/02/09 Business Standard

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Categories: kingfisher Feb 2009