Banks to hold deliberations with Kingfisher on Tuesday

Banks,including SBI,ICICI Bank,IDBI Bank and Punjab National Bank,have an exposure of Rs 7,700 crore to the airline. The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crore. The airline is currently facing deep financial trouble,which has led to a cancelation of a number of flights. The beleaguered airline has,so far,cancelled over 210 flights since last Monday.

Supporting Foreign Direct Investment in the domestic airlines,Chaudhuri said,“Unless another airline joins in,we don’t see much of value being added to KFA… They (KFA) have said that they are waiting for government to relax norms on aviation policy. There is clear indication that KFA wants to induct foreign airline as equity partner.”

Chaudhuri said at an Assocham organised event that lenders have asked King fisher Airlines (KFA) to bring Rs 800 crore as equity,of which the company informed that Rs 400 crore has already been arranged.

Setting a precondition for debt-restructuring,he said,“We want to see that money (Rs 400 crore) coming in. That has to be simultaneous.” Kingfisher is looking for additional working capital to tide over its severe cash crunch. It approached banks for a reappraisal of working capital requirements following a surge in price of fuel in recent months.

After the first round of meeting on Saturday,the banks have asked the airline promoters to put more equity into the venture and disclose additional financial details to them.

ICICI Bank chief Chanda Kochhar clarified that its Rs 400 crore exposure in the airline is well covered through securities and cash flows outside of the airline.

The airline has said that it has requested banks for a higher borrowing limit due to rising operating,costs caused by costlier fuel prices and rupee devaluation.