Kingfisher Airlines has sought the help of banks to substitute high-cost rupee borrowings with low-cost foreign currency debt, the UB Group-promoted company said today.
It has also asked banks to “appraise working capital requirements in the usual course, to account for changes in international prices of fuel and the change in rupee-dollar parity,” Ravi Nedungadi, president and group chief financial officer said here.
The banks are in “active consideration” of these requests and there is “absolutely no question” of another debt recast, he noted in a statement.
The 2003-founded airline is in deep financial crisis and had earlier announced that it plans to use a part of money parked with its aircraft lessors as safety deposits for maintenance to repay debt.
Today, Nedungadi also said the Mumbai-headquartered entity had asked for help from banks in releasing that money.
“We have sought help to release cash deposits held with lessors against maintenance reserves by providing bank guarantees in lieu,” said his statement.
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The airline expects to get at least 50-60 per cent of the $200 million to repay debt.
The airline, which started operation in May 2005, has Rs 6,000 crore in debt, after a part of its debt was restructured with the approval of banks. The restructuring required conversion of lenders’ debt of up to Rs 1,355 crore and promoters’ debt of Rs 648 crore into share capital.
The debt-restructuring exercise also called for Rs 900 crore of additional facilities to be provided by banks to the airline. Kingfisher plans to raise $1 billion, including a $250-million global depository receipt issue.
Even after the restructuring, the airline is in a financial crisis and has defaulted on payments to oil marketing companies and airport operators, among others. Recently, Hindustan Petroleum stopped fuel supply to the airline for a few hours after its dues touched Rs 650 crore. Of this, Rs 170 crore was not covered by any guarantee.
GMR, which operates the Delhi and Hyderabad airports, also threatened the airline that it would put it on a cash-and-carry system after dues touched Rs 90 crore (Rs 68 crore for Delhi and Rs 22 crore for Hyderabad).
Recently, Kingfisher Airlines, the only listed airline to end 2010-11 with a loss of Rs 1,027 crore, had announced that it would discontinue its low-cost wing, Kingfisher Red.