UB Group-promoted Kingfisher Airlines plans to use a part of money parked with its aircraft lessors as safety deposits for maintenance to repay debt.
“The money is lying idle with lessors. It is kept as safety deposit for maintenance of planes and other such things. The airline intends to talk to banks to issue letters of credit to the lessors,” said UB Group chief financial officer Ravi Nedungadi.
He said the airline was expected to get at least 50-60 per cent of the $200 million to repay debt. The airline 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.
Hindustan Petroleum recently 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).
Kingfisher Airlines, the only listed airline to end 2010-11 with a loss of Rs 1,027 crore, recently announced it would discontinue its low-cost wing, Kingfisher Red.
