Kingfisher Airlines

Jet shares jump on Etihad deal hopes

Economy

Dec 172012

A newspaper reported on Monday, Etihad may decide as early as this week whether it will invest in Jet Airways or Kingfisher Airlines, citing two people familiar with the development who requested anonymity.

The author has posted comments on this articleReuters | Dec 17, 2012, 12.02PM IST

MUMBAI: Shares of Jet Airways rose as much as 4.7 percent on Monday to a near two-year high, and were headed for a fifth straight session of gains, on growing expectations that Abu Dhabi’s Etihad Airways will buy a stake in the carrier.

Jet declined to comment.

Jet was up 4.3 percent as of 0557 GMT, after earlier hitting its highest since January 2011. Shares have surged 18 percent over the prior four sessions.

High bad debts temporary: SBI

Economy

Dec 152012

The author has posted comments on this articlePTI | Dec 15, 2012, 07.02PM IST
NEW DELHI: Attributing rising bad debts to economic slowdown, State Bank of India (SBI) today said high Non-Performing Assets (NPAs) are ‘temporary’.

“NPAs continue to be a challenge. But I don’t want to put a number to it. I can only tell you that large part of the NPAs is really because of the external economy and I would think that they are temporary only,” SBI Managing Director Diwakar Gupta told reporters on the sidelines of the Delhi Economics Conclave here.

SBI’s NPAs rose to 5.15 per cent in the second quarter ended September, from 4.19 per cent over the year-ago period because of deteriorating asset quality.

He said the bank has made adequate provisioning norms. “We have been providing in excess of the prudential provisions. Whatever Reserve Bank asked us to provide, we have been providing that, plus a little more.” Gupta said.

The Reserve Bank recently increased the provisioning for standard restructured assets for banks to 2.75 per cent from 2 per cent.

Replying to a query on Kingfisher Airlines revival plans, the SBI managing director said there is no need to panic as long as there are assurances from the airline.

“Kingfisher has been a good airline at some point of time. They are going through their set of problems. And there is no reason for bankers to panic as long as they say that they are looking for a solution. The assurance only is that they are trying,” he said.

SBI is the lead banker in the 17-lenders consortium that extended Rs 7,000 crore loans to the now grounded Kingfisher.

The lender has an exposure of Rs 1,500 crore to the Kingfisher Airlines, which has not been serviced since January, 2012.

Kingfisher has not reported any profit since its inception in 2005. It has debt over Rs 7,000 crore.

Gupta also said the Reserve Bank in its mid-quarter monetary policy review on December 18, 2012 should consider cutting both repo rate and the cash reserve ratio (CRR).

“As a banker, I can always say that our wish-list is that rate should change, they should reduce. Both repo and CRR,” he said.

Repo is the rate at which RBI lends money to the banks. It is at 8 per cent currently.

He said the RBI has already reduced the CRR fairly, though some more cut would be good.

“CRR has already been brought down significantly by the Reserve Bank, if they do a little more that will be great. Repo cut will actually bring down rate systematically in the system. So deposits will be cheaper therefore people will lend cheaper. Overall there will be a downward bias which has been required,” he added.

CRR is the portion of deposits banks have to mandatorily park with the RBI, which is at 4.25 per cent currently.

KFA caps FII investment to 3%

Economy

Dec 142012

The author has posted comments on this articleTNN | Dec 15, 2012, 04.53AM IST

NEW DELHI: Nearly bankrupt Kingfisher Airlines is preparing the ground for getting FDI by capping FII investment at 3%. The decision was taken at the grounded airline’s board meeting on Wednesday as it talks to various foreign investors and airlines for a possible stake sale.

In a filing to BSE on Thursday, the airline said it has barred qualified foreign investors or other non-strategic foreign investment (excluding investment by NRI) with immediate effect “beyond its current level of 3% or such other percentage that may be decided from time to time under intimation to the stock exchanges”.

This is being done with a “view to keeping the company’s capital structure in readiness for transactions that may be identified in the future for benefit of all stakeholders”.

At the end of the September quarter, the stake of overseas investors in the airline was 2.5%. Foreign direct investment in Indian carriers is capped at 49% and recently the government allowed foreign airlines to pick stake up to that level too.

The airline’s scrip gained almost 5% on BSE on Wednesday. The airline’s shares prices have been constantly rising for past eight days, a rally that gathered pace after it admitted being in talks with Etihad.

Incidentally, Jet Airways is also in talks with Etihad but a high price being sought by the airline is said to have tilted the balance in Kingfisher’s favour.

The filing said: “In this connection, it has been advised that a fresh infusion of capital by a financial or strategic, Indian or non-resident investor is a possible alternative.” On Tuesday, the airline had said it was in “discussions with various investors, including Etihad Airways, for equity investments.” While there were reports that Kingfisher was trying for a 48% stake sale to the Gulf carrier, the airline said: “No agreement has been reached either with Etihad or any other airline and the matters are merely at negotiation stages.”

KF aircraft impounded for Rs 63cr tax default

Economy

Dec 112012

The author has posted comments on this articleTNN | Dec 12, 2012, 03.59AM IST
MUMBAI: The service tax department has impounded an ATR aircraft belonging to Kingfisher Airlines for defaulting on dues amounting to Rs 63 crore.

The airline owes around Rs 190 crore to the service tax department, of which Rs 127 crore is under litigation. The airline had announced a partial lock-out on October 1, following a strike by its employees over non-payment of salary dues. Two weeks later, the Directorate General of Civil Aviation suspended the airline’s scheduled operators’ permit and the airline has been grounded for the last two months. Meanwhile, airline officials said that they had received a notice from the service tax department to which they had responded.

In a letter sent to assistant commissioner of service tax on Monday, the chief financial officer of the airline, A Raghunathan, said that the aircraft VT-KAR is taken on operating lease by Kingfisher Airlines and so the airline is just lessee and not owner of the aircraft. “Since the aircraft is taken by Kingfisher purely on operating lease basis and the airline is only a lessee of the aircraft, it does not feature as an asset in the books of accounts of Kingfisher,” the letter said.

Kingfisher, Etihad renew deal talks

Economy

Dec 112012

The author has posted comments on this articleTNN | Dec 12, 2012, 01.55AM IST
MUMBAI: Ailing Kingfisher Airlines returned to active discussions for selling a 49% stake to Abu Dhabi carrier Etihad even as investors on Tuesday lapped up shares of the debt-laden company, co-owned by UB Group chairman Vijay Mallya, and a clutch of domestic banks.

The grounded Kingfisher has been in protracted discussions with Etihad for more than a year, but talks revived in recent weeks, said people briefed on the matter. Kingfisher CEO Sanjay Agarwal and Mallya were leading talks with Etihad, which has reached a crucial stage, they added. “This deal has been in the making for a while and Etihad has stood by us, despite being wooed by others. This is a deal which gives them operational control and a large stake at an attractive valuation,” said a source who didn’t want to be named as talks were private. He declined to confirm media reports that a preliminary deal could be in place as early as next week.

Kingfisher Airlines, responding to queries from the stock exchanges, said it was in talks with three potential investors, including Etihad. These are in negotiation stages and no agreement has been reached, the company added. Kingfisher shares were locked at the upper circuit on Tuesday, after rising 5% to touch Rs 15.67 in early morning trade on BSE.

Mumbai Mirror, a Times Group publication, on Tuesday reported that Etihad was nearing a deal with Kingfisher to buy 48% stake in the latter, and transaction might get announced on December 18, which is Mallya’s birthday. Another report earlier this week said Etihad had returned to discussions with Kingfisher after its brief talks with Jet Airways didn’t move ahead.

Jet Airways chairman Naresh Goyal, who fought a bitter battle with challenger Mallya for market share, had stepped into discussions with Etihad after foreign carriers were allowed to buy a 49% stake in domestic airlines. Etihad CEO James Hogan told international media in recent weeks that his company was talking to three Indian carriers for a possible investment, but didn’t name any. Etihad acquired a stake in Virgin Australia, Germany’s Air Berlin and a 40% stake in Air Seychelles in the past one year.

“Foreign carriers know that Kingfisher will regain the market share once it starts flying and shoring up market capitalization will be no big deal then. Even lenders will be more than happy to reschedule debts,” said investment advisor S P Tulsian, who argued that the troubled airline presented the best bet for any foreign acquirer. Kingfisher carries a debt of Rs 8,000 crore and another Rs 3,000 crore supplier credit compared to Jet’s debt of roughly Rs 14,000 crore and supplier credit pegged at around Rs 4,000 crore, Tulsian added.

Meanwhile, Kingfisher Airlines lenders said they would insist that any new stakeholder should come in by fresh issue of shares into the company rather than sale of shares by promoters. The airline lenders are scheduled to meet on December 17 in Mumbai. “If the airline has to be operational it will need immediate capital for paying off dues to airports, staff and other service providers. This has to come in by issue of new shares so that funds go into the airline,” said a lender. “We may agree to another repayment schedule if new shareholder comes up with a viable plan,” he added.