Cashless Kingfisher Airlines to get help from UK liquor firm Diageo?

Billionaire Vijay Mallya's guarantees for the loans and liabilities of his troubled Kingfisher Airlines have been estimated at a whopping Rs 5,904 crore in the company's annual report for 2011-12, released ahead of its annual general meeting scheduled for September 26.

The guarantees provided by Kingfisher's holding and associate firms rose from Rs 8,863 crore to Rs 8,926 crore during this period. Mallya had got a commission of Rs 51 crore for these guarantees in 2010-11, but the airline has said payment of such commissions has been withdrawn after directions from the consortium of its lenders.

According to sources, UK-based liquor firm Diageo is expected to pick up close to 27-per cent stake in Mallya's United Spirits Ltd (USL) for about Rs 3,000 crore, which will be used to reduce the debt burden of Rs 8,000 crore of Mallya's firms.

Mallya is likely to offload up to 48 per cent stake in USL's wholly owned subsidiary Whyte &Mackay (W&M) as part his plans to reduce the huge debt burden and also pave the way for Diageo to buy the USL stake.

If Diageo acquires a significant control in USL, it will lead to indirect control over Whyte &Mackay, to which the European anti-monopoly body would object.

Kingfisher's net loss 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, 2012, down from Rs 6,306 crore a year ago. Besides, it had short-term borrowings of Rs 2,335 crore at the end of 2011-12 up from Rs 604 crore as on March 31, 2011.

For these loans, the airline has used as security all its movable assets, trademarks, goodwill of the company, credit card and other receivables and a mortgage on Kingfisher House.

Remuneration paid to Kingfisher's chief executive Sanjay Agarwal nearly doubled from Rs 2.12 crore to Rs 4.01 crore.

Kingfisher said its headcount fell by 1,651, or 22 per cent, to 5,696 persons in the last fiscal and the carrier is planning further steps for optimising human resources utilisation.

Writing on behalf of the company's board, Mallya said in the 'Report of Directors for the year 2011-12' that Kingfisher is working on a holding pattern basis with limited operation pending policy changes.

In aviation, an aircraft is said to follow the 'holding pattern' when it makes several mid-air turns waiting for a clearance to land or to avoid hitting other planes.

"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 wrote.

Courtesy: Mail Today