Debt-laden Kingfisher Airlines (KFA), owned by billionaire Vijay Mallya, faces the prospect of an operational shutdown, temporarily, and needs an immediate equity infusion of $600 million (Rs. 3,300 crore), feel aviation experts.
The liquor baron, who owns F1 and IPL teams, is heavily indebted to lessors, suppliers, lenders, employees, oil firms, airports and the tax department.
Aircraft lessors and banks have begun invoking corporate guarantees given by United Breweries Holdings (UB Holdings) - Mallya's flagship spirits business."The total amount invoked and outstanding as on June 30 is Rs. 836 crore and KFA is under negotiation in this regard with beneficiaries," UB Holdings said in its quarterly results filed on the Bombay Stock Exchange.
Mallya, who has invested over Rs. 4,000 crore in the airline since it started, has spoken about recapitalisation efforts in the past.
"I have said that our company will be re-capitalised whether the government changes the current FDI policy or not," Mallya said recently in a letter to employees who had struck work to protest against five months of unpaid salaries.
The airline is mulling asset sale to liquidate debt. It has approached bankers to dispose off Kingfisher House with the proceeds being paid to the banks.
KFA said it was "in discussion with several strategic and financial investors to bring in fresh capital" when it announced a Rs. 651-crore loss for the April-June quarter.
The airline did not respond to mails from HT seeking comments for the story.
"Without an investment of approximately $600 million in the next 30-60 days, and access to a further $400 million (Rs. 2,200 crore) over the next 12-18 months to fully fund its business plans, Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and reorganise," aviation consultancy firm Centre for Asia Pacific Aviation said in a recent research report.
"The promoters and the banks will need to make a clear decision and take appropriate action. A restructuring of the company will require the banks to take a significant haircut," it said.