Kingfisher not shutting down, has not sought bailout: Mallya

Battling financial crisis, Kingfisher Airlines Chairman Vijay Mallya on Tuesday said he has not asked for a bailout from the government but wants the lenders to help with Rs 700-800 crore (Rs 7-8 billion) working capital as short-term need and interest concessions.

Stating that Kingfisher Airlines was not shutting down, nor was it looking to enforce any large-scale lay-offs, the airline's chairman Vijay Mallya said that he was only asking for more working capital from the banks to keep the carrier flying.

"It will be wrong to write Kingfisher's epitaph," he said, reiterating that the "airline is not shutting down."

Mallya said that there will be no large scale layoffs but the airline would certainly cut costs to remain financially viable in this tough economic environment.

Facing all-round attack from political parties which are opposing any bailout for his airline, Mallya said, "We have not asked for any bailout from government. We have not asked the government to dip into the taxpayers' money. We have never done it, we will never do it."

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After announcing the second quarter results, which showed a loss of Rs 468.66 crore (Rs 4.686 billion), he told a press conference that "we are in dialogue with banks to open Letters of Credit which can help us recover debt and repay our high cost rupee loans."

"We have not asked for a concession. We have not asked for a hair-cut. Our demands with the banks are mainly two-folds. One is to meet short-term capital needs which have gone up and concession on interest," he said.

The banks have not told him formally that "we should infuse capital. If there is requirement of recapitalisation or infusion of additional equity, we will consider it."

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Mallya also said he has not sought any restructuring of the loan nor has he asked the banks to take a 'haircut'.

Referring to cancellation of more than 200 flights over the past week, he justified the move saying it was a "commercially prudent" decision.

"We cancelled flights not because we could not afford to. Even today Kingfisher is operating the rest of its schedule ... We could have handled the situation better. But it (flight cancellations) was a commercially prudent decision," he said.

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"Aircraft reconfiguration will give us incremental revenue generation opportunities," he added.

Kingfisher has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crore. Together, the 13-bank consortium now holds 23.4 per cent stake in the airline and has an exposure of over Rs 7,700 crore.

Asked how much working capital would the airline need, Mallya said, "We require Rs 700-800 crore, which includes both fund and non-fund based. ... We have pursued every opportunity to raise capital."

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Welcoming Prime Minister Manmohan Singh's recent statement that the government would find ways to solve the aviation industry's financial troubles, he said, "The prime minister is an economist who understands the importance of connectivity."

About the dues to oil companies, he said the airline has paid two state-owned oil companies -- Indian Oil and Bharat Petroleum -- in full. "We don't owe them a single paise."

On the Rs 600 crore worth of unsecured dues to the HPCL, Mallya said the oil firm has been given bank guarantees "and our unsecured credit has now come down to Rs 40 crore only."

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The chief of the UB Group, which runs Kingfisher, also announced that the company has applied to Directorate General of Foreign Trade (DGFT) for direct import of jet fuel, which would reduce fuel costs drastically. Jet fuel costs are almost 50 per cent of the total operating costs of the airline.

Mallya also said there were varied credit lines with various suppliers and vendors of the airline and refuted reports that certain lessors wanted to take back some of the leased aircraft in the Kingfisher fleet.

Kingfisher has applied to the Directorate General of Foreign Trade for direct import of jet fuel, Mallya said at the press conference.

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Mallya also said that the government must look at allowing 100 per cent foreign direct investment in aviation. He also repeated what he has been saying for a while: "Kingfisher cannot afford to fly heavily loss-making routes."

The UB Group chief said that his airline was making all efforts to cut interest costs.

Kingfisher is India's second-largest airline by market share. It expects to join the OneWorld airline alliance in the first quarter of next year, chief executive officer Sanjay Aggarwal told reporters on Tuesday.

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OneWorld alliance members, which include Cathay Pacific, American Airlines and British Airways, often use partners' routes and flights to shore up their own networks.

Earlier on Tuesday, Kingfisher reported a doubling of its loss in the fiscal second quarter on higher fuel prices and operating costs, amid investor worries about its future, and said its net worth has been eroded.