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The airline has not been paying salary to its employees since May last year. It had started delaying salaries much before the crisis broke out last October.
The sources also said the airline’s Chief Executive Sanjay Agarwal is in New Delhi for a meeting with the Directorate General of Civil Aviation (DGCA) to make a fresh request to resume operations. However, these developments could not be officially confirmed.
Earlier in the day, Kingfisher shares rose five per cent on the BSE, the maximum permissible limit on a day, after one of its promoters, United Breweries Holdings, raised its loan limit for the ailing carrier to Rs 750 crore from Rs 300 crore.
UB Holdings has sought approval from its shareholders to revise the lending limit for Kingfisher and to authorise its board of directors to take necessary action in this regard, the company had said yesterday.
Reacting to the development, shares of the company touched an intra-day high of Rs 10.53 on the BSE, higher by five per cent from its previous closing price at 1230 hours.
"To accommodate further lending to Kingfisher, if required, it is proposed to realign these limits further by increasing the lending limit to KFA from Rs 300 crore to Rs 750 crore and reducing the investment limit from Rs 1,200 crore to Rs 750 crore, thus maintaining the overall limit of Rs 1,500 crore," UB Holdings said in a shareholders' notice.
The revision was done to facilitate the conversion of loans given to Kingfisher into convertible/non-convertible securities, as required by the debt recast agreement between the airline and a consortium of its lenders.
Last Tuesday, the lenders to the airline, which number as many as 17 banks which together had extended Rs 7,000 crore to the company, had resolved to recall their loans to the airline, which had been grounded since October one last, saying more than enough time was given to the management to revive the crippled airline.
The lenders’ consortium leader State Bank, which has loan dues of Rs 1,700 crore, had said as a first step, lenders would monetise the collaterals given to them from other group companies like Mangalore Fertilisers and the flagship United Spirits, in which 54 per cent has been sold to the British spirits major, Diageo, for Rs 11,170 crore.
However, the UB Group has denied that it had given USL shares as collaterals to the lenders as well as the brand Kingfisher, which also covers its beer business. The bankers are expecting to recover around Rs 1,000 crore from these securities before the end of this fiscal itself.
Yesterday, SBI Chairman P Chaudhuri had said in Chennai that he was hopeful of recovering a "good portion of his Rs 1,700 crore dues from the airline."
AAI asks airline to pay Rs 390 crore in dues
Trouble never seems to end for Kingfisher Airlines, with state-run Airports Authority of India today tightening the noose saying it wanted a "firm commitment" from the grounded carrier for clearance of Rs 390 crore worth of dues before it is allowed to fly again.
"Our dues are more than Rs 390 crore, inclusive of penal interests. So, we are asking for a firm commitment in that because so far, what they have committed could not be honoured," AAI Chairman V P Aggarwal said in New Delhi. Replying to questions, he said, "Though there is news that they are planning to restart operations, there has not been any concrete proposal to us for dilution of our dues."
"So far, the approach was to revive the airline. But now we have decided to realise the securities provided by the airline. Our endeavour is to recover the full amount," Choudhuri said. Noting that recovery of dues would be after completing a "complicated, long, legal battle", he said the bank has made provisions to collect Rs 1,650 crore of the Rs 1,700 crore through realisation of securities.
The lenders also hope to take only a small cut from the entire fiasco as they have collaterals worth Rs 6,500 crore from group companies, excluding the brand Kingfisher, which in good times was valued at Rs 4,200 crore.
The airline, launched in May 2005 as a gift to Vijay Mallya's son Siddharth on his 18th birthday, has never made any profit.
