Bank bailout for Kingfisher hangs in balance

Lenders to Kingfisher Airlines have not agreed to extend further loans to the debt-crippled carrier, three banking sources said on Wednesday after reports that State Bank of India (SBI) had agreed on a bailout loan package.

Several newspapers reported that SBI had agreed to throw a lifeline to Kingfisher, which is majority owned by liquor baron Vijay Mallya, giving figures ranging from Rs 200 crore to Rs 1,650 crore.

But banking sources told Reuters the airline's consortium of 16 lenders, which includes SBI, were still studying a debt-restructuring proposal put forward last week.

"I don't think any individual bank can take a decision," said a source at the Punjab National Bank, India's second-largest public sector lender. "It will have to be decided by the consortium."

"We have to study the proposal, seek clarifications and then take a call individually," said another source at IDBI Bank.

SBI's chief financial officer, Diwakar Gupta, declined to comment.

Desperately strapped for cash, Kingfisher Airlines stands on the brink of collapse after nearly a week of flight cancellations and the resignation of dozens of its pilots.

India's second-largest airline until this year, Kingfisher has not turned a profit since it was founded in 2005 and is now carrying a debt burden of $1.3 billion.