Lenders have already burned their fingers with the 'king of good times' carrier and yet, the government is eager to bailout the debt ridden Kingfisher for the second time.
Kingfisher Airlines, which won the Skytrax award for India's best airliner in 2011, is again facing turbulence and instead of landing. There are efforts from certain quarters to keep the debt-ridden airline afloat. According to reports, Aviation Minister Vayalar Ravi indicated that the government might speak to lenders, especially state-owned banks for a possible bailout of the Airlines. Mr Ravi had been quoted as saying that he had spoken with Finance Minister Pranab Mukherjee and Petroleum Minister Jaipal Reddy, after Vijay Mallya, the flamboyant owner of Kingfisher sought government's help.
The question is why the is government eager to help bailout Mr Mallya and his debt-ridden Airlines for the second time, when its own national carrier, Air India is still not out of trouble? About a year ago, 18 lenders agreed to restructure Kingfisher's debt of Rs8,000 crore by cutting interest rates and converting part loans into equity shares. Lenders, including State Bank of India (SBI) and ICICI Bank converted debt of Rs1,400 crore into equities at around 60% premium at Rs64.48 per share to Kingfisher's market price of Rs39.9 a share in April 2011.
Considering Kingfisher's closing price of Rs19.85 per share on Friday the lenders already have lost Rs44.63 per share in the company. And yet, the politically well connected owner of the company is seeking government bailout.
11/11/11 Moneylife.in
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