Agencies/Bangalore
Billionaire Vijay Mallya said yesterday he was in talks with foreign carriers to sell a stake in his ailing Kingfisher Airlines after the government relaxed foreign investment rules.
“Yes, we are in talks with some foreign airlines and investors,” Mallya said at Kingfisher’s annual shareholders meeting here, while declining to give any names.
“We should respect their privacy and confidentiality. So, status will take time. We are making efforts to re-capitalise with partners,” Mallya said.
“We are going as fast as possible. We can’t go faster,” he added.
India this month allowed foreign airlines to buy stakes of up to 49% in domestic carriers, a long-pending policy reform that could save debt-laden Kingfisher, which is in desperate need of funds.
The flamboyant Mallya, who has not paid staff full salaries since April, has repeatedly said he has had interest from foreign airlines, but some analysts have questioned whether any investors would be prepared to put money into the group.
Debt-laden and loss-making Kingfisher has seen its once successful brand battered by frequent flight cancellations and its market share has shrunk to the smallest of India’s airlines.
Shares in the airline were up 4.5% at Rs15.10 in late afternoon trade on the Bombay Stock Exchange.
The group is due to meet today with its lenders, who are currently valuing the airline’s non-core assets, S Viswanathan, a deputy managing director of State Bank of India, has said.
After Kingfisher defaulted on several interest payments, an assets sale is being prepared to recover money from the airline.
Denying media reports that Kingfisher was flying only seven aircraft, Mallya said the airline has 40 aircraft and 15 aircraft were currently flying.
“We are looking for re-capitalisation to put the remaining 25 aircraft back in air, while we are flying 15 aircraft daily,” the chairman said.
Asked how other private airlines and budget carriers like Indigo and SpiceJet were able to make or show profits, Mallya said it was wrong to say some domestic airlines were profitable.
“None are making money on the domestic routes. Others use international revenue and show profit. One airline uses sales-and-lease-back model every month to show profit. As every airline is struggling, it was prudent for us to cut back capacity to contain losses,” Mallya said.
All Indian airlines, except privately owned IndiGo, posted losses in the financial year ending on March 31 after struggling with over-expansion, high jet fuel prices and rising airport fees.
Meanwhile SpiceJet said it is not in talks with any other airline for equity dilution though the option is open.
“We have not held formal talks with any airline. We are not desperate to raise money as we do not have any cash flow crisis,” Neil Mills, chief executive, told reporters on the sidelines of the company’s annual general meeting.
He said the company would look at diluting stakes to another airline if the deal is good.