UB Group chairman Vijay Mallya on Wednesday said that the group is in talks with foreign carriers for a possible investment into its troubled airline Kingfisher Airlines (KFA).
?Yes we are in talks. I think that I have to respect the privacy and confidentiality. Suffice it to say that we are having conversations,? Mallya told reporters on Wednesday. ?In response to how close we are, the policy (FDI) was announced only ten days ago, we can go so fast and not faster. It?s a bit early to say that there is a status report that I can give to anyone.?
At the airline’s annual general meeting (AGM) on Wednesday, shareholders raised concerns over the company’s efforts to raise capital to stabilise operations, its revenue model and overdue salary payments to employees. At least two people raised the question of a change in management, according to a shareholder FE spoke to.
Mallya told KFA shareholders that some domestic investors have shown interest in the airline, and that this would be conveyed to the consortium of lenders who are set to meet him on Thursday.
The airline, which has debt of around R8,000 crore, is in dire need of capital to stabilise operations. Its lenders have also pointed out that Mallya can unlock value from group companies like Mangalore Chemicals and Fertilizers or his liquor firms and use the funds to revive the airline. Mallya’s comments on talks with prospective investors come a day after his liquor arm United Spirits confirmed discussions with Diageo, the world’s largest spirits company by revenue, for a possible stake sale.
?We have regular meetings with the Kingfisher banking consortium. I can confirm that there is a meeting tomorrow and we will make a presentation to them as requested,? Mallya told reporters. ?We had a meeting last month and this is a regular affair. We obviously have to keep meeting bankers.?
Banks have declined to provide Kingfisher additional funds after it defaulted in December and the cash-strapped airline, which has never posted a profit since it started operations in 2005, has not paid salaries to its employees since February this year.
Mallya, however, said that the promoters have infused R1,154 crore into the airline since April 2012, and said that it was prudent to cut back capacity to contain losses. However, the shareholders said that Mallya did not answer any of their questions on employee salaries at the AGM.
He clarified that the salary of chief executive officer Sanjay Agarwal was not increased during FY12 and that the higher salary figure was because he had joined the company midway through the previous fiscal.
