Govt rejects Vijay Mallya as Kingfisher Airlines director

NEW DELHI (Reuters) - The government has rejected the re-appointment of liquor baron Vijay Mallya as managing director of Kingfisher Airlines , as pressure mounts on the tycoon to help his company repay its debts.

Kingfisher, which has not flown since 2012, said in a statement on Monday that the Ministry of Corporate Affairs had rejected an application for Mallya's re-appointment, without detailing why.

Indian banks want Mallya, once known as "The King of Good Times" for his flamboyant lifestyle, to help repay more than $1 billion of loans Kingfisher owes to a consortium of largely state-run banks.

The airline founded by Mallya failed to make a profit during the eight years from launch to the grounding of its fleet in October 2012, and has been unsuccessful in efforts to find new investors to revive its operations.

United Bank of India , among more than a dozen banks owed money by Kingfisher, has already declared Mallya a "wilful defaulter", which in Indian law would mean that he could be forced to stand down from any corporate posts and could damage the fundraising prospects of businesses with which he is associated.

Besides positions at Kingfisher and his UB Group, Mallya is chairman of United Breweries , the Kingfisher beer maker now 38 percent owned by Heineken , and United Spirits , which is majority owned by Diageo .

(Reporting by Tommy Wilkes; Editing by Michael Urquhart)