Will Vijay Mallya ditch Kingfisher Airlines to save United Spirits?

It was a week of public anxiety for Vijay Mallya. He was frantically trying to save his empire, spanning businesses as diverse as spirits and an airline, from going under. He was in talks with investors to revive his floundering carrier, Kingfisher Airlines, and his relatively chipper liquor business, United Spirits. Mallya also had lots of explaining to do before irate shareholders and lenders. All indications point to an empire slipping away.
Analysts and industry experts have been predicting Kingfisher Airlines' demise for a year now. Why shouldn't they? The airline is saddled with around Rs 8,000 crore of debt. It has failed to pay salaries, taxes and fuel bills. Its market share is now just over 3%. Businesses with far lesser problems have collapsed in the past and Kingfisher, the most feckless of all Mallya companies, has showed enough signs it will meet a similar fate. Yet, miraculously, Mallya has managed to keep the airline aloft.
30/09/12 Binoy Prabhakar/Economic Times

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Kingfisher Airlines’ lenders appoint SBI Capital for restructuring plan

Mumbai: Lenders to Kingfisher Airlines appointed SBI Capital Markets for the third time in as many years to work out a restructuring plan as promoter Vijay Mallya failed to come up with equity investment details yet again, two bankers present at the meeting said. The government's decision to permit 49% foreign direct investment in domestic carriers bought three more weeks for Mallya to come up with the equity funding plan.
Bankers also rejected a proposal from the company to revoke the pledge of Mallya's palatial bungalow on the Goa seafront and provide an alternative asset as collateral during their two hour long meet where Mallya, Kingfisher Airline chief executive Sanjay Aggarwal and UB Group chief financial officer Ravi Nedungadi were present. The company's request for an immediate Rs 200 crore loan to keep the airline afloat was also rejected by the bankers given that there has been little progress on paper about fresh equity investment, said the bankers, who did not want to be identified.
27/09/12 Sobia Khan, Biswarup Gooptu & Sangita Mehta/Economic Times

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Bankers likely to adopt more aggressive stance towards Kingfisher Airlines

Bangalore: Lenders to debt-laden Kingfisher Airlines are expected to adopt a more hardened stance during their meeting with Chairman Vijay Mallya on Thursday, as they up their ante to recover about Rs 7,500 crore loaned to the airline.
"The Kingfisher loan has become a non-performing asset for most banks. During our last meeting, we had categorically asked for a concrete plan relating to debt recovery from the Kingfisher management, including Mallya, before September 30," a banker with one of the leading lenders said on the condition of anonymity.
27/09/12 Biswarup Gooptu & Sobia Khan/Economic Times

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KFA fails to assure banks, next meet by Oct end

Vijay Mallya owned Kingfisher Airlines (KFA) failed to assure its lenders with any 'concrete' solution for restructuring of debt in a meeting held on Thursday in Bangalore. The consortium of banks now decided to hold a meeting by the end of October without any participation from the airline company. Bankers have been asking for an equity infusion as a part of recast scheme for the company's total loans of around Rs 7,000 crore.
Restructuring is the process when a borrower fails to repay its loan in time and asks for some relaxation of original terms and conditions.
"Nothing concrete has come out of the meeting. The option of bringing money from United Spirits (a group company) to KFA is also ruled out. That is considered to be overleveraged. Diageo would not be routing funds to KFA through that window.
27/09/12 Saikat Das/moneycontrol.com

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Kingfisher Airlines in stake sale talks: Mallya

Bangalore: 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.
27/09/12 Times of India

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Kingfisher Airlines vendor demands Rs 45 lakh payment

Bangalore:  Wing Commander Raghuraman, a Kingfisher Airlines investor and vendor, today demanded Rs 45 lakh from the carrier, which he claimed was due for ground support services provided by his company Adisys Solutions.
"An email was shot off to me by a top KFA official promising to pay me Rs 45 lakh, which is due for providing ground support services to the company. He promised to pay me in the AGM today but it did not materialise," he said.
Raghuraman was talking to reporters after attending the annual general meeting (AGM) of Kingfisher held here.
Raghuraman said he did not have confidence in Kingfisher and would exit the company whenever the share moves up a little.
26/09/12 PTI/Economic Times

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Kingfisher in talks with foreign airlines: Mallya

Bangalore: Following the government's move to allow FDI in the civil aviation sector, Chairman of debt-ridden Kingfisher Airlines Vijay Mallya today said the carrier was in talks with foreign airlines.
"Yes, we are in talks" he said on the sidelines of the annual general meeting of the UB Group, promoted by him.
However, he did not provide details citing "privacy and confidentiality" reasons.
When asked how beneficial the new FDI policy will be for Kingfisher, Mallya said it was too early to comment.
Mallya also informed that his airline will be making a presentation to the SBI-led consortium of banks that have lend to Kingfisher.
"We have regular meetings with the KFA banking consortium. I can confirm that there is meeting tomorrow. We will make a presentation to them as requested," he said.
Banks together have an exposure of nearly Rs 7,000 crore in the airline and the loans have all become non-performing assets since January.
26/07/12 PTI/Business Standard

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Close shave for Kingfisher passengers at Chennai airport

Chennai: Passengers on board a Kingfisher Airlines’ plane had a close shave after a baggage trolley collided with the aircraft at the Chennai airport on Wednesday.
The incident occurred today morning when after Kingfisher ATR plane with flight number IT-2494 was pushed back from the parking bay and was taxing to the active runway for takeoff to Bangalore. All of sudden, fluting rules, a baggage trolley vehicle intruded into the flight path and collided with the plane.
The aircraft’s fuselage was substantially damaged, leading to the abandoning of the flight plan.
26/09/12 ZeeNews

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How long can Kingfisher fly with only 7 aircraft

Controversies related to Kingfisher Airlines   shrinking capacity just doesn't seem to end. This time around, media reports suggest that the airline is operating only seven aircraft and if the number drops below five, the operator of the carrier will have to shut shop as mandated by the airport regulator.
However, an official at the airline says that they are still flying around 16-20 aircraft and a few are grounded due to regular maintenance and will be operating after routine maintenance checks are complete. "If we are curtailing operations, we have to inform the Directorate General of Civil Aviation before the winter schedule starts. We have not yet informed the regulator about it," he said.
The DGCA website also doesn’t have any information on the airline shrinking operations. But a possibility cannot be ruled after considering that it operates at a 7.5% cancellation rate, the highest in the industry.
26/09/12 Moneycontrol.com

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Can't use Kingfisher brand as collateral, RBI tells banks

Mumbai: The Reserve Bank of India (RBI) has asked banks not to treat Kingfisher Airlines’ brand as collateral since it is intangible. This is because the loan has turned non-performing for most of the banks.
The RBI’s rejection means lenders will have to treat their exposure to Kingfisher as unsecured, for which the provisioning requirement will go up substantially.
Loans to the airline have become non-performing for a host of banks, including State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India and Central Bank of India, among others. Since the loan became sub-standard — the first category of NPA — banks had provided for 15 per cent of the loan value, assuming the asset was secured with the brand being treated as collateral.
According to bankers, the RBI has reminded them that for provisioning purposes, assets backed by intangible securities cannot be treated as secured. For unsecured assets, the provisioning requirement is 25 per cent in the sub-standard category.
26/09/12 Manojit Saha/Business Standard

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DGCA keeping watch over Kingfisher Airlines' financial health

Mumbai:  The Director General of Civil Aviation said it is monitoring the financial health of Kingfisher Airlines along with other procedural lapses that popped up during the safety audit conducted by the regulator recently. "Financial issues at an airline may sometime also become safety issues and we are keeping a watch on Kingfisher as it has some unpaid dues to its pilots," said Arun Mishra, DGCA.
26/09/12 Economic Times

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Kingfisher Airlines' lessors pay Airports Authority of India directly to fly planes out of India

New Delhi: Foreign aircraft leasing companies wishing to repossess their planes from near bankrupt Kingfisher are paying Airports Authority of India (AAI) about a crore for flying each plane out of India. Kingfisher owes about Rs 290 crore to the state-run AAI and the latter told the airline it would not allow any lessor to repossess aircraft from it — due to non-payment of lease rentals — to leave India unless the dues are cleared.
"About two months back, Kingfisher paid us about Rs 1 crore or 2 crore so that a lessor could take their aircraft back. Later the airline could not even pay that much to allow lessors to take planes out of India. Now lessors are coming to us and paying money to do that. So far, three aircraft have been repossessed by lessors by paying us Rs 1 crore per plane. Kingfisher has not paid them and they are paying us so that the planes can be leased out to some other airline abroad," said a senior AAI official.
25/09/12 Saurabh Sinha/Times of India

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DGCA finds no safety lapse in Kingfisher safety audit

The Directorate General of Civil Aviation (DGCA) has given a clean chit to cash-trapped Kingfisher Airlines, in it safety audit. According to the report, the aviation regulator has not found any safety lapse by KFA, reports CNBC-TV18.
However, KFA has been asked to respond on procedural issues. The Vijay Mallya led-company is likely respond to safety audit by October 30.
Meanwhile, the DGCA is working with state govts to lower taxes on air turbine fuels (ATF). It is also hoping to bring down ATF prices by 5-10% in near future.
25/09/12 moneycontrol.com

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Vijay Mallya can sell stake in liquor companies to raise funds for Kingfisher Airlines: SBI Chief

Mumbai: Vijay Mallya, chairman of Kingfisher Airlines (KFA), can raise funds by selling stake in Mangalore Chemicals & Fertilizers (MCF) or liquor companies to rescue the airline, said Pratip Chaudhuri, chairman of State Bank of India, a top lender to the airline. KFA has not yet come up with any concrete plan to revival plans, said Chaudhuri. But Mallya could still raise funds from his assets. he added. Speaking to media on Monday, Chaudhuri said: "Mallya could look at unlocking value from other non-core businesses like Mangalore Fertilizers." Mallya has equity stakes in Mangalore Fertilizers and UB Group which manufactures bear and spirit. "Mallya can unlock cash from a number of group companies like the liquor business," he said.
25/09/12 Economic Times

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SBI execs to meet Kingfisher Airlines' Vijay Mallya within days

Mumbai: State Bank of India (SBI) officials will meet the founders of Kingfisher AirlinesBSE 0.22 % in the next couple of days, S. Vishvanathan, the bank's deputy managing director said, after India allowed foreign airlines to take stakes in local carriers.
"(Vijay) Mallya is keen to keep control of Kingfisher... So the sense we have from him is that he is willing to do everything possible, including big sacrifices," SBIBSE -0.56 % Chairman Pratip Chaudhuri said, adding that the bank had no specific details on a reported sale of a stake in United SpiritsBSE 2.56 %.
India's decision this month to allow foreign carriers to invest in local airlines was welcomed by Kingfisher, which is saddled with a debt of $1.4 billion.
Earlier this month, the SBI chief was sounding pessimistic about the fate of its exposure to Kingfisher.
24/09/12 Economic Times

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Absence of adequate numbers of independent directors haunts Kingfisher Airlines

Mumbai: The absence of adequate numbers of independent members on the board of Kingfisher Airlines in violation of listing agreement after resignation of five independent directors last year has been laid bare by Stakeholders Empowerment Services (SES).
SES, a proxy advisory firm started by former Sebi executive director JN Gupta, says the airline has not appointed independent directors even after eight months in violation of the replacement deadline.
"Shareholders should note that during the year five independent directors have resigned from the company. Diwan Arun Nanda resigned on Sep 5, 2011, Piyush Mankad and Ghyanendra Bajpai resigned on Jan 9, 2012, Vijay Amritraj resigned on Mar 14, 2012, Anil Ganguly resigned on March 17, 2012. Consequent to resignation of Piyush Mankad and Ghyanendra Bajpai on Jan 9, 2012, the company has missed the 180 days deadline to appoint new independent directors," the SES note said.
22/09/12 Economic Times

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Kingfisher tops list of flight cancellations

Mumbai:  Kingfisher airlines topped the list for most number of cancellations in the month of August this year. According to data release by Directorate General of Civil Aviation (DGCA), 7.4 percent of the cash-strapped airline were cancelled. It was followed by Jet airways, which cancelled 3.5 percent of the flight, followed by Jetlite which had 2.7 percent cancellations. Indigo airline has the least cancellations reported, with only 0.3 percent flights being cancelled.
The data released by the aviation regulator also showed that 50 percent of the flights were cancelled due to commercial reasons. "This means, that either it was not viable for the airline to operate the flight or some flights were clubbed with others due to low passenger loads," an official at Mumbai airport said. "Such cancellations indicate decreasing passenger loads to some sectors," he added.
22/09/12 Chinmayi Shalya/Times of India

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Vijay Mallya set to enter toughest period of his career

Bangalore: It will be a hectic week for Vijay Mallya starting Monday – September 24th. A series of AGMs are slated during the week, during which he will be up against his shareholders who will be really pushing him for answers on why there is so much flux surrounding almost all of his five major listed companies.
Top of the list, is of course, Kingfisher Airlines, followed by UB Holdings, United Spirits, United Breweries and then Mangalore Chemicals & Fertilizers (MCF). There is intense speculation on all these five companies on how Mallya will steer the UB Group during the next year and it is indeed a herculean task.
During last year’s AGMs, Mallya came out fighting and assuaged his shareholders that he will put the Group back in shape, but the situation has only worsened in Kingfisher Airlines, UB Holdings as well as in United Spirits.
As he faces his shareholders during this time around, he will be pretty much aware that there is an inherent need to capitalise on one of his assets and settle the long standing issue of high-leverage in his three main companies, which is proving to highly unwieldy. While Kingfisher Airlines is under a debt of close to Rs 9,000 crore on a negative networth, United Spirits has a debt of Rs 8,600 crore on a leverage of around two times.
22/09/12 Business Standard

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Encashing Kingfisher bank guarantee last resort, says HPCL

Mumbai: The Vijay Mallya-run Kingfisher Airlines owes state-run Hindustan Petroleum Corp Ltd (HPCL) Rs 505.53 crore in jet fuel dues against a bank guarantee of Rs 434 crore, according to the oil marketing company’s annual report.
“If Kingfisher fails to pay our dues, we have the option of encashing the bank guarantee. But, as of now, we are hopeful the entire dues will be realised,” a senior HPCL official told Business Standard, requesting anonymity.
HPCL is Kingfisher's biggest aviation fuel supplier. It had snapped supplies to the airline in March due to non-payment, a move that grounded its flights temporarily.
While IndianOil Corp Ltd's supplies to Kingfisher are negligible, Bharat Petroleum Corp Ltd (BPCL) sells fuel to the airline on a cash-and-carry basis at some airports.
A senior BPCL official, who also did not want to be named, said that in case an airline failed to pay the dues, oil marketing companies could take action for recovery of dues in accordance with the mutually-agreed commercial terms. Interest on the amount is recovered in overdue payments.
19/09/12 Kalpana Pathak/Business Standard

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Consumer forum dismisses complaint over delay of Kingfisher flight

Chandigarh: Finding no deficiency in services on the part of Kingfisher Airlines Limited, as per a complaint filed by a resident of Mohali, the UT Consumer Disputes Redressal Forum has dismissed a claim for compensation stating “reasons beyond control” of the aircraft in a case of flight delay.
Rupinder Singh had sought compensation for a delayed Kingfisher flight from Chandigarh to Mumbai, leaving no time for him and his family to board another flight from Mumbai to Nandel within a time margin of 1.45 hours. In his complaint, Singh alleged that he had to cancel his bookings and rebook his flight and accommodation as he missed the second flight, causing him mental tension and forcing him to extend his leave at work and his brother to miss an examination.
19/09/12 Indian Express

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