A chorus against the government bailing out Kingfisher Airlines grew louder on Sunday, as eminent industrialist Rahul Bajaj spoke out against any state aid to rescue liquor baron Vijay Mallya’s expensive aviation dream, while bankers lined up a meeting next week to decide the fate of the cash-strapped airline.
“I am a proud private sector man and I don’t see any logic of bailing out any private sector company either for sake of employees or customers,” Bajaj said in Mumbai. “If Bajaj Auto gets into a mess, would you bail me out?” he asked with rhetorical flourish. “If it’s a free market economy, those who die must die.”
State Bank of India’s (SBI) chairman Pratip Chaudhuri said in Kolkata that bankers were meeting with the airline’s management in Mumbai next Tuesday. The head of the country’s biggest lender said bankers were seeking more details on the airline’s fleet, fuel supplies and equity. “Banks can come in as lenders not promoter. We will respond (on the basis of ) how it unfolds,” PTI quoted Chaudhuri as saying.
While analysts estimate that leading banks may need to set aside Rs 1,000 crore to cushion any bad loan linked to the airline, banks that control 23.3% in the airline following a debt restructuring last year have the option of forcing chairman Mallya to fork out more money — possibly R2,500 crore — from his core family assets to rescue the airline, or move to wrest control.
Bajaj’s comments come a day after prime minister Manmohan Singh said he will talk to aviation minister Vayalar Ravi to “explore ways and means in which the airlines can be helped”. The prime minister had said private sector airlines should be managed efficiently, “but if they do get into difficulties, we have to find ways and means to help them get out of the process.”
The airline says it has not sought a bailout from the government.
Hours before the PM’s comments, Ravi had issued a statement that no bailout package was pending before the government nor had his ministry proposed one for Kingfisher Airlines.
However, last Friday, Ravi had said he had spoken to the finance and petroleum ministries to extend credit to Kingfisher, which has been grounding flights and defaulting on fuel payments.
Kingfisher, which hasn’t made profits since its inception in 2005, has lately been delaying salaries to employees. It had a debt of more than R7,000 crore as on 31 March.