Crisis-hit Kingfisher airlines today questioned whether it was the private carrier's duty to fly on loss-making routes, even as Government said there is no move to bail out the airline which has cancelled 210 flights in six days.
Kingfisher owner Vijay Mallya while blaming the system of airlines in the country being overtaxed and overcharged also said governments abroad have "gone out of the way" to support air carriers and connectivity.
With 50 more flights being cancelled, the beleaguered airline has cancelled 210 flights since Monday putting hundreds of passengers to inconvenience.
"This is to clarify that no such bailout package is pending before the Government nor has been proposed by Ministry of Civil Aviation for the Kingfisher Airlines," Civil Aviation Minister Vayalar Ravi said in a statement.
Ravi's clarification came aagainst the backdrop of Opposition flak over his statement that he would talk to the Finance Ministry to see whether banks and oil firms could provide some relief to the cash-strapped airline.
On the other hand, Mallya, who had earlier this week sought government help, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"
In another tweet, he posed: "Is it Kingfisher's duty 2 fly on loss making routes when state governments tax heavily? Or should v be financially prudent n fly profitably".
Official sources said while no bailout was being given by the government to Kingfisher, it was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.
Kingfisher CEO Sanjay Aggarwal said the airline has not made any bailout request to the government but admitted "we have only asked our banks for an increase in limits due to significant increase in operating costs caused by increase in fuel prices and rupee devaluation."
Kingfisher officials were today closeted with their legal and financial advisors and its lenders began deliberations to consider if the struggling airline's debt could be restructured.
Overall, banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs 7,700 crore to the airline.
Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit and bank guarantees. It is also believed to be seeking soft payment options from oil companies for jet fuel.
Kingfisher owner Vijay Mallya while blaming the system of airlines in the country being overtaxed and overcharged also said governments abroad have "gone out of the way" to support air carriers and connectivity.
With 50 more flights being cancelled, the beleaguered airline has cancelled 210 flights since Monday putting hundreds of passengers to inconvenience.
"This is to clarify that no such bailout package is pending before the Government nor has been proposed by Ministry of Civil Aviation for the Kingfisher Airlines," Civil Aviation Minister Vayalar Ravi said in a statement.
Ravi's clarification came aagainst the backdrop of Opposition flak over his statement that he would talk to the Finance Ministry to see whether banks and oil firms could provide some relief to the cash-strapped airline.
On the other hand, Mallya, who had earlier this week sought government help, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"
In another tweet, he posed: "Is it Kingfisher's duty 2 fly on loss making routes when state governments tax heavily? Or should v be financially prudent n fly profitably".
Official sources said while no bailout was being given by the government to Kingfisher, it was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.
Kingfisher CEO Sanjay Aggarwal said the airline has not made any bailout request to the government but admitted "we have only asked our banks for an increase in limits due to significant increase in operating costs caused by increase in fuel prices and rupee devaluation."
Kingfisher officials were today closeted with their legal and financial advisors and its lenders began deliberations to consider if the struggling airline's debt could be restructured.
Overall, banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs 7,700 crore to the airline.
Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit and bank guarantees. It is also believed to be seeking soft payment options from oil companies for jet fuel.
Kingfisher Airlines asked by DGCA to give details of plans to reconfigure fleet
Ailing Kingfisher Airlines, which cancelled more than 160 flights over the last six days, has been asked by aviation regulator DGCA to give details of their plan to reconfigure its fleet to prevent a large-scale flight disruption.
Maintaining that it has received some "interim replies" from liquor baron Vijay Mallya-owned carrier, sources in the Directorate General of Civil Aviation said it was awaiting more details as it has been found that the airline was not operating flights as per the approved winter schedule.
Mallya, meanwhile, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"
In another tweet, he posed: "Is it Kingfisher's duty 2 fly on loss making routes when state governments tax heavily? Or should v be financially prudent n fly profitably".
Kingfisher, which has been cancelling over 30 flights each day since Monday, had yesterday cancelled 40 services across its network.
DGCA, which issued a show-cause notice to Kingfisher in this regard, has also sent similar notices to IndiGo and SpiceJet and asked them to submit their cancellation details.
"When the schedule for winter was approved, it was with immediate effect. So we took a stock of the position and on that basis, we asked them to explain," DGCA chief E K Bharat Bhushan said.
He also warned that if the airlines were found not operating the slots allotted to them, these will be given to others who are willing to operate "regardless of who it is".
As its shares crashed to a record low amid continuing debt fears, beleaguered Kingfisher sought government's intervention to help it restructure its finances.
Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit as well as bank guarantees. Kingfisher is also believed to have sought soft payment options from oil companies for jet fuel.
However, official sources said, "No bailout was being granted to Kingfisher by the government."
The sources said the airline was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.
Civil Aviation Minister Vayalar Ravi had yesterday said the entire aviation industry needed help especially to meet the crisis caused by rising jet fuel prices.
Ravi's comments drew sharp criticism from BJP leader and former Finance Minister Yashwant Sinha, who said there was "no case for a government bailout for Kingfisher. We cannot support such a step."
Congress spokesperson Manish Tewari said it remains to be seen whether in a market economy the government will walk the extra mile to bail out a private company or should allow the shake-out to take place and the fittest to survive.
Maintaining that it has received some "interim replies" from liquor baron Vijay Mallya-owned carrier, sources in the Directorate General of Civil Aviation said it was awaiting more details as it has been found that the airline was not operating flights as per the approved winter schedule.
Mallya, meanwhile, tweeted: "Every government has gone out of the way to support airlines and connectivity. In India airlines are overtaxed and overcharged. Wonder why?"
In another tweet, he posed: "Is it Kingfisher's duty 2 fly on loss making routes when state governments tax heavily? Or should v be financially prudent n fly profitably".
Kingfisher, which has been cancelling over 30 flights each day since Monday, had yesterday cancelled 40 services across its network.
DGCA, which issued a show-cause notice to Kingfisher in this regard, has also sent similar notices to IndiGo and SpiceJet and asked them to submit their cancellation details.
"When the schedule for winter was approved, it was with immediate effect. So we took a stock of the position and on that basis, we asked them to explain," DGCA chief E K Bharat Bhushan said.
He also warned that if the airlines were found not operating the slots allotted to them, these will be given to others who are willing to operate "regardless of who it is".
As its shares crashed to a record low amid continuing debt fears, beleaguered Kingfisher sought government's intervention to help it restructure its finances.
Kingfisher is understood to have sought about Rs 300 crore of funded limit and a similar amount to secure Letters of Credit as well as bank guarantees. Kingfisher is also believed to have sought soft payment options from oil companies for jet fuel.
However, official sources said, "No bailout was being granted to Kingfisher by the government."
The sources said the airline was free to approach the concerned ministries on issues concerning soft loans and for restoration of the credit line from oil PSUs for the uplift of jet fuel.
Civil Aviation Minister Vayalar Ravi had yesterday said the entire aviation industry needed help especially to meet the crisis caused by rising jet fuel prices.
Ravi's comments drew sharp criticism from BJP leader and former Finance Minister Yashwant Sinha, who said there was "no case for a government bailout for Kingfisher. We cannot support such a step."
Congress spokesperson Manish Tewari said it remains to be seen whether in a market economy the government will walk the extra mile to bail out a private company or should allow the shake-out to take place and the fittest to survive.
BSE
19.65
-09.44%
-02.05
Vol:7265326 shares traded
NSE
19.65
-09.44%
-02.05
Vol:24728874 shares traded
Kingfisher Airlines bailout: Why options before government & banks are limited
BSE 19.65 -09.44% -02.05Vol:7265326 shares traded NSE 19.65 -09.44% -02.05Vol:24728874 shares traded
BSE
19.65
-09.44%
-02.05
Vol:7265326 shares traded
NSE
19.65
-09.44%
-02.05
Vol:24728874 shares traded
Can Kingfisher be given what the media is calling a bailout? A real 'bailout' would mean an actual infusion of cash by the government into the ailing private sector airline, that's extremely unlikely. It would be fiscally and politically hugely damaging for the government.
Also Read:
Kingfisher Airlines is equipped to tide over the crisis: Sanjay Aggarwal, CEO
Why Vijay Mallya is not Richard Branson & vice versa
UB Group minus Kingfisher Airlines? How will it look?
What the airline is hoping for is more of what it got a year back: banks will 'restructure' its debt, currently estimated at around Rs 7,000 crore. Kingfisher's main lenders are State Bank of India (SBI), IDBI, PNB, Bank of India and ICICI Bank.
What can help from banks involve? On paper, the following are options (all used in the previous restructuring): conversion of part of the loans into equity or preference shares, more liberal terms on existing loans, infusion of fresh debt into the airline to help it pay off its dues. There's also a 'corporate debt restructuring' option.
During and after the first restructuring, Kingfisher's loans were classed as 'standard' on banks books. This basically means there's some hope of getting the money back. A second restructuring of those same loans, would get them downgraded a notch to 'sub-standard'. This is still one step above a full-fledged bad loan, or a non-performing asset.
So a CDR for Kingfisher's loans is still possible. But a CDR will require all banks of the consortia to agree to a set of terms and conditions.
The Last Baliout & Its Impact
In a hard-hitting report on Kingfisher, analysts at Veritas, a Canadian research firm, had this to say about the first bailout: "The debt restructuring touted by KAIR [Kingfisher] is nothing to write home about. We believe that non-performing loans have been rechristened/repackaged into subordinated debt, and that Kingfisher has defaulted on its obligations is unquestionable. We do not believe that KAIR's antics would have found any takers in a responsible credit market and that the airline would have been liquidated by now."
There were other problems with the restructuring. As part of the deal, banks converted a part of their loans to equity at a 60% premium to market price in early April. Some observers have made the point that the consortium of banks, which is collectively owed Rs 7,000 crores, were allotted one seat on the board, the promoters had three.
Can Kingfisher be given what the media is calling a bailout? A real 'bailout' would mean an actual infusion of cash by the government into the ailing private sector airline, that's extremely unlikely. It would be fiscally and politically hugely damaging for the government.
Also Read:
Kingfisher Airlines is equipped to tide over the crisis: Sanjay Aggarwal, CEO
Why Vijay Mallya is not Richard Branson & vice versa
UB Group minus Kingfisher Airlines? How will it look?
Kingfisher Airlines is equipped to tide over the crisis: Sanjay Aggarwal, CEO
Why Vijay Mallya is not Richard Branson & vice versa
UB Group minus Kingfisher Airlines? How will it look?
What the airline is hoping for is more of what it got a year back: banks will 'restructure' its debt, currently estimated at around Rs 7,000 crore. Kingfisher's main lenders are State Bank of India (SBI), IDBI, PNB, Bank of India and ICICI Bank.
What can help from banks involve? On paper, the following are options (all used in the previous restructuring): conversion of part of the loans into equity or preference shares, more liberal terms on existing loans, infusion of fresh debt into the airline to help it pay off its dues. There's also a 'corporate debt restructuring' option.
During and after the first restructuring, Kingfisher's loans were classed as 'standard' on banks books. This basically means there's some hope of getting the money back. A second restructuring of those same loans, would get them downgraded a notch to 'sub-standard'. This is still one step above a full-fledged bad loan, or a non-performing asset.
So a CDR for Kingfisher's loans is still possible. But a CDR will require all banks of the consortia to agree to a set of terms and conditions.
The Last Baliout & Its Impact
In a hard-hitting report on Kingfisher, analysts at Veritas, a Canadian research firm, had this to say about the first bailout: "The debt restructuring touted by KAIR [Kingfisher] is nothing to write home about. We believe that non-performing loans have been rechristened/repackaged into subordinated debt, and that Kingfisher has defaulted on its obligations is unquestionable. We do not believe that KAIR's antics would have found any takers in a responsible credit market and that the airline would have been liquidated by now."
There were other problems with the restructuring. As part of the deal, banks converted a part of their loans to equity at a 60% premium to market price in early April. Some observers have made the point that the consortium of banks, which is collectively owed Rs 7,000 crores, were allotted one seat on the board, the promoters had three.
No comments:
Post a Comment