The consortium of 17 banks led by the State Bank of India, which are exposed to Kingfisher Airlines debt, are meeting tomorrow to discuss the future of their investment.
The consortium has an exposure of over Rs. 7,000 crore in advances to the carrier and it has not been paid since January. The airline also an accumulated loss of over Rs. 8,000 crore and has yet to make a profit since launch in May 2005.
The meeting could result in the operational shutdown of the airline to allow it to restructure and re-organise with a viable turnaround plan, although analysts say this is unrealistic without a significant recapitalisation of the airline.
The airline has recently released the Report of the Directors for 2011-12 to its shareholders ahead of the Annual General Meeting on September 26, in Bangalore. Chairman Vijay Mallya states: "Due to the current situation, your company is operating as a 'holding pattern' with limited operation, pending policy changes which are in the offing.”
Mallya states that the airline is working to downsize its operations given the pressure on the costs due to fuel price rises, rupee de-valuation, rising interest rate and continued downward pressure on yields.
Kingfisher Airlines' net loss has more than doubled to Rs 2,328 crore in 2011-12, from Rs 1,027 crore in the previous year. Its total long-term borrowings stood at Rs 5,695 crore as on March 31, down from Rs 6,306 crore a year ago.