Kingfisher to restructure debt

Bangalore-based Kingfisher Airlines, the country's second largest carrier in terms of market share, is set to realign its debt, reported to be over Rs 6,000 crore (Rs 60 billion).

A senior executive at a Mumbai-based public sector bank said, "State Bank of India Capital Market is working on debt recast for Kingfisher. The plan, which may involve giving more time for loan repayment, is expected to be ready within 30 days. The total exposure of banks in the form of debt is above Rs 1,000 crore (Rs 10 billion)."

The executive added that the airline sector had hit an air pocket. "The passenger load factor and revenues had declined sharply due to the economic slowdown. However, the repayment obligations of airlines to banks and oil companies have continued to grow."

However, banks consider Kingfisher a viable account and the airline is being treated as a standard asset since interest on loans is serviced regularly.

Sources confirmed Vijay Mallya, chairman of Kingfisher Airlines, met SBI Chairman O P Bhatt two weeks ago. It was also reported that Kingfisher would go for a GDR issue some time after the realignment.

Kingfisher is still in the red with a third-quarter loss of about Rs 420 crore (Rs 4.2 billion) and analysts expect it to take more time to break even.