New Delhi:
The government has said repeatedly that it will not bailout Kingfisher Airlines. But sources tell NDTV that State Bank of India has suddenly sanctioned a 1200-crore package for Vijay Mallya's bleeding carrier. Meanwhile, the airline cancelled at least 20 flights today, most of them out of Mumbai, continuing a trend it began over the weekend. Here are 10 developments in this story:
1) Civil Aviation Minister Ajit Singh said this morning that "it's good if banks give loans to the airline." Mr Singh was asked about whether the government-owned State Bank of India was providing an emergency exit for Kingfisher, owned by Vijay Mallya. Mr Singh did not confirm or deny those reports. He stressed that he does not want the airline to close down, but passenger safety and convenience are the main priority. "Banks have to decide on loans based on the business plan of the company. If they are satisfied with the business plan, they should proceed with loans," he said.
2) NDTV has learnt that the State Bank of India, which has the maximum exposure to the airline at 1400 crore, is reportedly ready to provide a Rs 1200-crore relief package to Kingfisher. Of this, nearly 700 crores will be provided in working capital loans. "Cannot comment due to client confidentiality," SBI Chairman Pratip Chaudhuri told NDTV. SBI's package is likely to include bank guarantees and loan repayment extensions, sources said.
3) Meanwhile, Air India has refused to accommodate on credit any Kingfisher passengers whose flights have been cancelled. This means that Air India will not accept transfer vouchers issued by Kingfisher.
5) Kingfisher has attributed this week's crisis to the Income Tax department, which last week froze Kingfisher's bank accounts for unpaid dues. On Wednesday, Finance Secretary R S Gujral denied media reports that the accounts had been unblocked.
6) Kingfisher has followed orders issued by the DGCA yesterday, and submitted a revised schedule based on its current flying capacity. Bharat Bhushan, who heads the DGCA which is the regulator for the aviation sector, had asked for this yesterday. 28 of Kingfisher's 64 planes are currently in use.
7) Mr Bhushan has also ordered a special audit to ensure that Kingfisher's financial preoccupations are not impeding upon passenger safety. He had said yesterday that though nothing suggests this, he would like a safety report to prove the airline is following all guidelines.
8) Mr Bhushan had summoned the CEO after a weekend that saw hundreds of passengers stranded because Kingfisher cancelled flights without any notice or alert to its passengers. The airline also failed to inform the DGCA of its revised schedule, which is a basic requirement.
9) The airline's consortium of 16 lenders, which includes SBI, have been studying a debt-restructuring proposal shared last week.
10) Kingfisher's current debt is close to 1.3 billion dollars or Rs. 7,057.08 crore.