Kingfisher Airline’s embattled chairman said he is close to sealing a $370m deal with an Indian private investor and a banking consortium that would save his cash-strapped carrier.

Vijay Mallya said in an interview with the Financial Times he would soon close a deal with 14 banks led by State Bank of India, the country’s largest lender by revenues, that would provide the airline with working capital – a short-term loan for the running of the company – of Rs6bn($118m).

The flamboyant billionaire added that he was finalising a separate $250m equity injection from a wealthy Indian individual to recapitalise the lossmaking airline.

The Bangalore-based entrepreneur declined to name the investor. “I don’t want to get hung by the Securities and Exchange Board of India,” Mr Mallya said.

Mr Mallya said he was about to conclude a deal with the banks that would reduce the cost of the interest rate the airline is paying on the $1.4bn debt it has accumulated.

“We want to substitute high-cost Indian rupee borrowings with low-cost foreign exchange borrowings because the interest rate is much less,” said Mr Mallya.

SBI, ICICI Bank and Bank of Baroda, three of Kingfisher’s biggest lenders, did not immediately reply to requests for comment.

Investors are closely monitoring the fate of Kingfisher, India’s second-largest carrier by market share, since the carrier cancelled a number of flights last week, sparking fears among investors that its days were numbered.

Jet Airways, SpiceJet and Kingfisher, India’s three listed airlines, have all lost more than 65 per cent of their market value since the beginning of the year, hit hard by soaring fuel prices and a severe price war set in motion by state-run Air-India.

Kingfisher is in the most critical condition, despite the number of passengers flying in the first nine months of 2011 rising 19 per cent from the same period a year earlier. Mr Mallya’s airline has an interest expense to net sales ratio of 21 per cent compared to 6.8 per cent for its main Indian competitor Jet Airways.

The airline reported on Tuesday that revenue rose 11 per cent year on year to Rs15.3bn in the quarter that ended in September but net losses doubled to Rs4.69bn, with fuel costs up 71 per cent.

“We’ve taken all the right steps,” Mr Mallya said. “We are working on additional initiatives to reduce our costs and interest costs, we have not asked the banks for any bail-out or haircut,” he added.

Investors seem to be responding to Mallya’s assurances, with the company’s stock rising nearly 17 per cent since a press conference on Tuesday.

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