Kingfisher-lenders meet inconclusive, again

Today’s meeting between Kingfisher Airlines officials and its core group of lenders failed to yield any result, as the troubled carrier is yet to give any proposal on paying dues, something its lenders have sought for long. It is this deadlock that had resulted in such inconclusive meetings in the past, too.

“The meeting remained inconclusive,” said a public sector banker, adding there was no commitment on the payment of dues.

Banks have sought the company start regularising the account, which has slipped into the non-performing asset (NPA) category on the books of most lenders.

While banks have exposure of about Rs 7,000 crore to Kingfisher, the company would have to pay about Rs 1,600 crore to regularise the account, banking sources said. In case an asset turns into an NPA, to re-classify the account as standard, the borrower has to pay the bank regularly for a year.

The core group of the lenders to Kingfisher, comprising State Bank of India, Bank of Baroda, Bank of India, IDBI Bank, Punjab National Bank and United Bank of India, sought to know what they would get from the Rs 650-crore revival plan the carrier had given to the Directorate General of Civil Aviation (DGCA).

In the plan, loan repayment wasn’t part of Kingfisher’s fund infusion budget. “They have failed to come up with any plan on how to go about the repayment,” said a banker present at the meeting. Most of the lenders have already made provisioning of about 90 per cent on their exposure to the airline. Kingfisher’s chief executive Sanjay Aggarwal and UB group Chief Financial Officer Ravi Nedungadi attended today’s meeting.

Kingfisher Chairman Vijay Mallya has promised to infuse Rs 650 crore into the airline to help restart its operations. Initially, it would have seven planes; their number would be raised to 21 in four months. However, this plan didn’t find favour with Civil Aviation Minister Ajit Singh and DGCA.

In October, DGCA suspended its operating permit. It also insisted Kingfisher secured no-objection certificates (NOCs) from its lenders, airports and oil companies.

While oil companies and lessors have reportedly issued the company NOCs, banks said the airline should first clear its other dues. They felt if Kingfisher was given fresh funds, it might use these to clear past dues and, therefore, the company’s operations wouldn’t benefit.

The lenders also ruled out any fresh loan or restructuring of the loans that hadn’t been serviced by the company since January 2011, unless the airline management provided fresh capital infusion.

The airline owes about Rs 1,800 crore in salary dues, tax arrears, vendor/lessor fees and airport charges. The airline also has bank debt of about Rs 7,500 crore. Its accumulated losses stand at about Rs 8,000 crore.