India's Kingfisher Airlines is still in talks with a potential local investor to raise funds, its chairman said Friday, even as woes mounted for the cash strapped carrier with a major airport set to stop facilities on credit.
"That's going on," Vijay Mallya said on Friday in televised comments, in response to a query on whether he was talking to a local investor.
"I know that you are in a hurry to fix a timeline for it, but things do take time, particularly negotiations," he told reporters in New Delhi after a meeting with India's finance minister.
Mallya did not elaborate on the details of his meeting with Pranab Mukherjee.
The meeting with Mukherjee follows a meeting of aviation company chiefs with Prime Minister Manmohan Singh seeking his intervention to help the carriers tide over the deep financial crisis and were assured that "legitimate" grievances would be considered.
Kingfisher, India's third largest airline, has been struggling to raise funds to continue operations and repay debt, but has found the going difficult due to the uncertain economic environment.
In a media interview in November, Kingfisher's founder and flamboyant liquor baron Mallya had said he was close to sealing a $370 million deal with an Indian private investor and a consortium of banks that would save the airline.
Mallya, however, brushed aside concerns that his airline operations may be grounded in Mumbai, one of the busiest connections in India, following a cash and carry directive by the Mumbai airport.
"I don't understand what is this big thing about cash and carry. If we have to pay on a daily basis (or) weekly basis, we will pay, and the flights will operate uninterruptedly," Mallya said.
On Thursday, India's Mumbai International Airport Pvt Ltd sent a legal notice to the struggling carrier threatening to put it on cash and carry from Saturday citing non-payment of dues.
Under cash and carry, an airline has to clear its dues to avail of any facilities.
Kingfisher, which has never made a profit since its launch in 2005, is facing a series of financial difficulties. It has eroded its net worth after reporting a doubling of its loss in the fiscal second quarter on higher fuel prices and operating costs.
Kingfisher has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in a long punt on the future.
The Centre for Asia Pacific Aviation (CAPA) has forecast a record $2.5-$3 billion loss for Indian airlines for the year ending March 2012, with state-run Air India alone likely to account for more than half of it.
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Debt Reduction Drive
Kingfisher Airlines has been asked by its creditors to raise $160 million in equity while holding debt restructuring till it has a credible plan.
Mallya said that talks with lenders was "an ongoing process". He refused to elaborate.
Kingfisher, whose current debt stands at over Rs 65 billion, has a negative networth.
It aims to cut debt to Rs 37.2 billion through sale and lease back of aircraft, sale of a property in Mumbai and conversion of rupee loans into lower interest foreign loans, an investor presentation posted on its website showed.
According to the presentation, Kingfisher seeks to convert Rs 12 billion of rupee loans to foreign currency loans and aims to raise Rs 1.8 billion through sale and lease back of aircraft.
The airline, which is targeting an interest cost reduction of Rs 3.94 billion per annum, also plans to raise Rs 900 million from the sale of a property in Mumbai.
Shares in Kingfisher, valued at $228 million, closed up 3.56 per cent at Rs 24.7 in a firm Mumbai market.
The stock has lost 64 per cent since the beginning of 2011. The main index is down about 18 per cent in the year to date.