Kingfisher’s funding plan by end-Oct

Bengaluru: Kingfisher Airlines Ltd, the cash-strapped Indian carrier that has suspended flights, will submit a funding plan to banks by end of the month, its biggest lender said.

“We’ve given them time till the month-end to provide a plan on equity infusion,” A. Krishna Kumar, managing director of State Bank of India, said in Mumbai at a conference. “We may not take any further step till we get it.”

Chairman Vijay Mallya is seeking investments to avert the collapse of Kingfisher, which is saddled with Rs86 billion ($1.6 billion) of debt following years of losses. The airline, once India’s second-biggest carrier, also faces the risk of losing its license after extending a shutdown through October 12.

India’s aviation regulator last week asked the airline why its license shouldn’t be cancelled or suspended after engineers and pilots refused to work until seven months of unpaid salaries are settled. Kingfisher said it will respond to the regulator’s notice within the 15-day deadline.

The carrier fell by the daily limit of about 5 per cent for the seventh day in Mumbai trading. It’s lost 43 per cent this year, after plunging 68 per cent in 2011.

State Bank, the nation’s biggest, has lent as much as 15 billion rupees to Kingfisher, and has made provisions for the unsecured part of the debt, Chairman Pratip Chaudhuri said last month. The airline defaulted on loan and interest payments on several occasions in the year ended March 31, according to its annual report.

Mallya also gave personal guarantees totalling 59 billion rupees for loans taken by Kingfisher, according to the annual report. It didn’t give the terms for the guarantees. Assets worth 89 billion rupees, including brand, planes and office furniture, have also been pledged to back the airline’s loans.

Mallya has said he is in discussions with overseas airlines to sell a stake in Kingfisher, after India’s government last month eased investment rules. The billionaire is also in talks to sell a stake in United Spirits Ltd, the largest distiller in India, to Diageo Plc.