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Kingfisher nearing deal to save airline: Reports

business Updated: Nov 18, 2011 11:50 IST

Reuters
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Chairman-and-CEO-of-India-s-Kingfisher-Airlines-Vijay-Mallya-looks-during-a-press-conference-in-Mumbai-Kingfisher-Airlines-said-it-had-doubled-its-losses-in-the-July-September-quarter-as-its-billionaire-chief-Vijay-Mallya-was-set-to-announce-plans-to-keep-the-Indian-company-afloat

The chairman of Kingfisher Airlines, Vijay Mallya, said in an interview with the Financial Times he was close to sealing a $370 million deal with a private investor and a consortium of banks that would save the airline.

The Bangalore-based entrepreneur told the FT he was nearing a deal with 14 banks led by State Bank of India that would provide the loss-making carrier with working capital of 6 billion rupees ($118 million). He did not name the banks.

Earlier this week, Kingfisher said its net loss for the September quarter doubled but Mallya offered little to revive its finances. It had also said it had been approached by strategic investors.

Mallya, a flamboyant liquor baron who owns a Formula One motor-racing team, told the paper he was finalising a separate $250 million equity injection from an unnamed wealthy Indian individual to recapitalise the cash-strapped carrier.

He added that he was about to conclude a deal with the banks to reduce the interest rate which the airline is currently paying on its $1.4 billion debt pile.

Mallya said on the social networking site Twitter that the report was "factually wrong", but he did not elaborate.

Reuters could not immediately reach company officials for a comment.

Shares in Kingfisher, which is named after its parent firm's best-selling beer, were down more than 5% in early trade on Friday in Mumbai.

Kingfisher, which listed when it bought out budget airline, Air Deccan in 2008, has never made a profit and its market value has plunged 64% this year.

The airline became India's No 2 private carrier since it began operations in 2005 as the economy boomed but it has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.

($1 = 50.910 Indian Rupees)