Kingfisher Airlines has not sought bailout, planning fuel imports to cut costs: Mallya

Battling a financial crisis, Kingfisher Airlines chairman Vijay Mallya on Tuesday ruled out the airline's closure and said he has not asked for a bailout from the government. Mallya was addressing the press after a board meeting to chalk out a rescue plan for Kingfisher's revival.

HIGHLIGHTS FROM THE PRESS MEET

However, the business tycoon said he has requested the airline's lenders to help with Rs 700-800 crore working capital as short-term need and interest concessions.

He also advocated for foreign direct investment (FDI) to help the aviation industry come out of the difficult situation it has been going through.

Facing all-round attack from political parties which are opposing any bailout for his airline, Mallya said: "We have not asked for any bailout from government. We have not asked the government to dip into the taxpayers' money. We have never done it, we will never do it."

IN DEPTH: No short-term solution for over-ambitious Kingfisher

The Kingfisher Airlines chairman also thanked Prime Minister Manmohan Singh for his intervention to look for a solution to bailout the private carrier.

"Kingfisher Airlines cancelled flights not because we could not afford to, but because some of them were not commercially prudent," Mallya said, admitting that the airline did commit some mistakes.

HOW THE SHARES REPONDED

"Mistakes do happen... We can't fly on loss-making routes. We are not Air India. We are accountable to banks," Mallya said.

After announcing the second quarter results earlier in the day, which showed a loss of Rs 468.66 crore, Mallya told the press conference that "we are in dialogue with banks to open Letters of Credit which can help us recover debt and repay our high cost rupee loans."

"We have not asked for a concession. We have not asked for a hair-cut. Our demands with the banks are mainly two-folds. One is to meet short-term capital needs which have gone up and concession on interest," he said.

The banks have not told him formally that "we should infuse capital. If there is requirement of recapitalisation or infusion of additional equity, we will consider it."

THE BIG REVIVAL PLAN

Talking about the airline's revival plan, the billionaire said "aircraft reconfiguration will give us incremental revenue generation opportunities".

The cash-strapped airline is also planning to directly import jet fuel to cut costs.

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"We have applied officially to the ministry of commerce for direct import of fuel, and if we import fuel directly for our own use we become an actual user, and therefore, we don't pay sales tax," Mallya said.

He said the fuel costs account for over 50 per cent of the operating cost, which gets increased due to the sales tax charged by various state governments.

Mallya further said the airline has managed to reduce its dues to the three state-run Oil Marketing Companies.

"We have fully repaid Indian Oil and Bharat Petroleum. As far as Hindustan Petroleum is concerned, from over Rs 600 crore of unsecured credit... we have given bank guarantees and our outstanding to them is now down to Rs 40 crores."

The airline has curtailed 40 flights every day since November 9 - a move, the company said, was taken to rationalise route plans and improve yields.

The airline has not posted any profit since its launch five years ago, and reported a net loss of Rs 1,027 crore in the last financial year and Rs 263 crore in the last quarter.

- With inputs from PTI and IANS