With the situation at the ailing Kingfisher Airlines Ltd turning grave, lenders to the Vijay Mallya-controlled carrier have decided to hold an emergency meeting tomorrow to review the situation and look at legal options for recovery of dues.
The crisis in Kingfisher worsened today as reconciliatory talks between the management and striking engineers and pilots over payment of salary failed. Employees, who haven’t got salaries since March this year, rejected the offer of part payment and vowed to continue their agitation.
A senior executive of a public sector bank said lenders wanted to hear out the Kingfisher management for specific steps to salvage the situation. “We have already given them enough time to get their act together and come up with a concrete plan,” the executive, who did not want to be named, said.
The meeting is slated to be held at the State bank of India (SBI) headquarters in Mumbai. Another senior executive, who also requested anonymity, said bankers would consider recovery by exercising legal options, including slapping notices under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
Kingfisher has an outstanding debt of over Rs 7,000 crore and which is a non-performing asset (NPA) on the books of most banks such as SBI, Bank of India, Bank of Baroda and Punjab National Bank.
The airline’s loans were restructured in November 2010 under the industry dispensation, giving it a breather during stressful times. Kingfisher, however, began to default on payments and its debts turned NPAs for most lenders in the third and fourth quarters of 2011-12.
At the last meeting with lenders in Bangalore on September 27, the airline’s management did not present a satisfactory road map for tackling the crisis and beginning repayments. The company, though, repeated its demand for immediate funding assistance, the first bank executive quoted above said. The UB group has already announced plans to sell its non-core assets to make payments for dues to lenders.
