India probes bank loan to troubled Kingfisher airline

India's top crime fighting body is investigating a US$155 million (S$194m) loan by a state-run bank to debt-ridden Kingfisher Airlines, a police official said Sunday (Aug 10). The Central Bureau of Investigation (CBI) was conducting an initial probe into why the 9.5 billion rupee (US$155 million) loan from the IDBI bank was approved given Kingfisher's levels of debt.

"When the company was in the red why did the IDBI bank give the loan?" CBI spokeswoman Kanchan Prasad told AFP. Kingfisher, owned by India's liquor baron, the flamboyant Vijay Mallya, owes nearly US$1.5 billion to banks, airports, fuel suppliers, staff and others.

The low-cost airline, which did not make any profit since it started operating in 2005, lost its licence to fly two years ago, after it failed to end a strike by staff including over a failure to pay wages.

Owners of Kingfisher's grounded planes have taken them back.

Prasad said the CBI had carried out a "preliminary enquiry" into the loan over the past two months. The next step could be the filing of a formal case. Last week, the CBI arrested the chairman of state-run Syndicate Bank over allegations that he took bribes in exchange for loan extensions to private companies.

Prasad said the two cases were not connected, saying the watchdog was not targeting loans by state-run financial institutions as part of a specific investigation.

Mallya, once the self-proclaimed "King of Good Times", who made his fortune through his liquor business, has been battling to maintain control over his empire. The flamboyant businessman, also a co-owner of a Formula One team, was known to host lavish yacht parties with Bollywood stars and politicians as guests.

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India's Kingfisher Airlines loses another US$382m

India's grounded Kingfisher Airlines, owned by billionaire liquor baron Vijay Mallya, said on Friday it lost another US$382 million in the first quarter of the year.

The private carrier is struggling to win back its permit to fly after a deadline to renew its suspended licence expired in January.

The company posted a net loss of 21.42 billion rupees (US$382 million) in the three months to March, compared with a 11.52 billion rupee loss a year earlier.

It has never made a profit since it started operations in 2005 and owes millions of dollars to banks, airports, fuel suppliers and its staff.

"The company did not have any operations during the quarter," Kingfisher confirmed in its statement.

Kingfisher lost permission to fly after it failed to present a viable recovery plan to the aviation regulator.

Most of the carrier's 4,000-odd employees have not been paid since July 2012, which led to a strike by its pilots and engineers in October.

Kingfisher was the worst-hit of India's airlines in 2012, with the industry plagued by high jet fuel prices, fierce competition, price wars and shabby airport infrastructure.

Mallya is desperate to find an outside investor to help get the airline running again.

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God knows how Kingfisher managed to survive till today having ground its fleet since last year.

Kingfisher shares dive on bank loan-recall plan

Shares of India's debt-laden Kingfisher Airlines plunged on Wednesday after banks said they would start recalling loans worth $1.5 billion, which analysts said spelled the end for the carrier.

The firm, controlled by Indian liquor baron Vijay Mallya, slid five percent -- its daily limit -- before edging clawing back some losses to trade down 4.58 percent at 10.62 rupees in mid-afternoon.

"The banks' decision to start the recovery process means the end of the road for Kingfisher" if they carry it through, Kapil Kaul, regional head of leading aviation consultancy CAPA, told AFP.

The creditor banks' announcement late Tuesday that they would begin recalling the outstanding loans pave the way for the sale of Kingfisher assets held as collateral.

"We have decided to recall (initiating the recovery process) the loans given to Kingfisher Airlines," Shymal Acharya, a deputy managing director of state-run State Bank of India, which heads the consortium of bank lenders, said.

A spokesman for Bangalore-based Kingfisher he could not immediately comment on the banks' decision.

"I am not able to wager a guess (when the airline will be able to comment)," Prakash Mirpuri, an airline vice president, told AFP.

The carrier, whose planes have been grounded since October, has never made a profit since it began flying in 2005, while it owes vast sums to banks, airports, fuel suppliers and its staff.

Kingfisher has a number of real estate assets that it put up as collateral against its loans, including its office in financial hub Mumbai, but analysts said most of its planes were on lease and lessors have taken them back.

"It is over for Kingfisher -- it was over one year back," Sharan Lillaney, aviation analyst at Mumbai's Angel Broking, told AFP.

The airline, once India's second-biggest carrier and known for its red-carpet service, posted a net loss of 7.55 billion rupees ($142 million) in the three months to December.

"We had given them (the airline) many chances to come back with a specific positive action plan about their restart plans. But they could not come up with any concrete action plan," Acharya told reporters.

"There is no reason for us to give further time to the company," he added.

Kingfisher, which made costly acquisitions as it sought to grow its business, was the worst-hit of India's airlines last year, as the industry was plagued by high jet fuel costs, a price war and shabby airport infrastructure.

Mallya, who dubs himself "the king of good times", has been desperately scouting for a foreign airline or other investors to put money into Kingfisher to get it flying again.

But analysts have expressed doubts over whether any investor would be interested, given a debt load that is estimated to total $2.5 billion by CAPA.

Mallya is expected to get some funds from the $2 billion sale of a majority stake in India's United Spirits but the deal still must clear regulatory hurdles.

The tycoon in the past has insisted he will not use his other businesses to "cross-subsidise" the airline.

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Kingfisher's days are numbered with the bank making the decision of recalling the loans. An airline that never made any profit n failing to pay its employees for half a year, it was bound to fail. Even though it is already seeking foreign investors, the rut it is in is probably too deep for anyone to rescue them.

India's Jet Airways in talks with Etihad about stake sale

Loss-making private Indian carrier Jet Airways said on Thursday that it was in talks with Etihad Airways about selling a stake to the Abu Dhabi-based airline.

"These discussions are in progress but no terms have been firmed up at present," Jet said in a statement to the Bombay Stock Exchange.

Jet shares rose as much as 6.1 per cent to 615.4 rupees at the BSE, reacting to the news. Its shares have jumped over 60 per cent since India's government relaxed rules for foreign investment in the aviation sector.

The airline said an "appropriate announcement" would be made once the terms of the investment by Etihad were finalised.

Jet said that "various structures" are being explored.

"By its very nature, there cannot, at this stage, be a firm time line as to the progress of these negotiations, considering the complexity of trans-national transactions such as this," the statement said.

The Business Standard newspaper reported on Thursday that Etihad may pick up a 24 per cent stake in Jet, valued at between 15 to 18 billion rupees (US$270-320 million), quoting an unnamed aviation ministry official.

Tail Winds, the Isle of Man-based investment firm of Jet founder Naresh Goyal, currently holds nearly 80 per cent of Jet Airways.

Several loss-making Indian airlines have been in talks with foreign carriers after the government last year opened up the aviation sector further to allow non-Indian airlines to invest in their counterparts in the country.

A deal between Jet and Etihad could make matters worse for ailing Kingfisher Airlines, which is in desperate need of cash to fly again and was in talks with Etihad to sell a stake.

"Jet-Etihad talks are on but it (Etihad) may not be in a hurry," said an aviation analyst with a Mumbai-based brokerage, declining to be named.

"Valuation will be the most critical," he said, adding that the balance sheets of most local airlines are weak.

Only one of India's six main scheduled carriers -- privately held low-cost carrier IndiGo -- was in profit last year, helped by a strict business plan and on-time performance.

Indian carriers need money to fund expansion and cut debt after years of losses caused by intense air-fare battles and rising fuel costs.

Losses for Indian airlines come despite rising demand for airline travel spurred by the rising incomes of India's middle classes.

Jet and Etihad may also consider a "marketing agreement", another analyst said, which could allow for training and technology facilities to be used between the two.

Factors like high fuel taxes, weak policy, regulations and infrastructure challenges, could dampen hope of deals being finalised quickly, analysts said earlier.

Aviation consultancy firm Centre for Asia Pacific Aviation has said that low-cost GoAir and SpiceJet were carriers "with the greatest prospect" to attract foreign airline investment.

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India's aviation is booming, but its airlines are all dying. A great example of how poor management can fail businesses even in a boom. If Jet Airways succeeds in selling some stake to Etihad Airways, Kingfisher will have very little chance of a turnaround since its grounding in October last year.

Let's await to see how long Kingfisher can continue bleeding

India's Kingfisher Airlines loses licence to fly

India's troubled Kingfisher Airlines has lost its permit to fly after a deadline to renew its suspended licence expired, the national aviation regulator said on Tuesday.

The news is a fresh blow for the debt-laden carrier whose operations have been grounded since October after employees went on strike over unpaid wages.

"Kingfisher's flying permit has lapsed," Directorate-General of Civil Aviation chief Arun Mishra said.

"They failed to provide additional details on the funding of operations," Mishra added, referring to Kingfisher's revival plan submitted to the DGCA last month.

But the airline said there is no "cause for concern" as the rules allow for the renewal of a permit within two years of expiry.

"Kingfisher is confident of securing approval from the regulator on the restart plan, licence approval and reinstatement of its operating permit," its spokesman Prakash Mirpuri said in a statement late Monday.

Kingfisher, controlled by liquor baron Vijay Mallya, owes millions of dollars to banks, airports, fuel suppliers and its staff and has been looking for a foreign investor to inject fresh funds.

The firm has been the worst-hit of India's airlines in 2012, with the industry plagued by high jet fuel prices, fierce competition, price wars and shabby airport infrastructure.

The carrier was India's second-largest until a year ago but its share shrank to just 3.5 per cent -- the smallest in the country -- before operations stalled completely.

Kingfisher said it was in talks with foreign investors including Abu Dhabi-based Etihad Airways after the government cleared investment by foreign airlines in the key transport sector.

Aviation analysts have expressed doubt over Etihad's purported interest in Bangalore-based Kingfisher given the Indian firm's debt load, which is estimated at $2.5 billion by the consultancy firm Centre for Asia Pacific Aviation.

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It just gets worse day by day. As long as nobody comes in to pull them out of this rut, they will probably not see the skies ever again.

Kingfisher shares rise on new licence application

Shares in India's grounded Kingfisher Airlines climbed nearly three per cent on Friday on news that the stricken carrier has applied to renew its operating licence.

The move came days after Kingfisher, whose liquor baron owner Vijay Mallya has been desperately seeking investment from foreign carriers, said it aims to resume operations in a "phased manner".

Kingfisher's shares rose to 15.88 rupees in morning trade after regulatory authorities confirmed it had applied Thursday for the licence renewal.

An official said, however, that the application had not included the revival plan that has been demanded by regulators.

"This application needs to be made as their licence is expiring but there can be no (licence) renewal without a revival plan," the official at the Directorate General of Civil Aviation told AFP, asking not to be named.

Kingfisher, once India's second-largest airline by market share, could not be immediately reached for comment but it said on Monday it has come up with a full recapitalisation plan.

The firm has not flown since its planes were grounded in October by an employees' strike over unpaid wages, leading the regulator to suspend its operating licence until it comes up with a "viable" revival formula.

The airline, whose current licence expires on December 31, said last week it was in talks with investors including Abu Dhabi-based Etihad Airways.

But aviation analysts have expressed doubt whether Etihad would be interested in Bangalore-based Kingfisher given its debt load, which is estimated at $2.5 billion by the consultancy firm Centre for Asia Pacific Aviation.

Kingfisher's shares have climbed from an all-time low of 7.05 rupees in August on investor hopes a stake sale will avert a shutdown but they are still trading at a fraction of their record 2007 peak of 334 rupees.

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It's a miracle that they are even alive. How do they do it, I have totally no idea. Being grounded since October and US$2.5billion in debt, it is an airline waiting to go bust. We shall see which airline is willing to invest in it with the uncertain global economy we are facing now.