Lenders to India's grounded Kingfisher Airlines have decided to take initial steps towards recovering $1.4 billion of loans in default after the company failed to come up with a viable funding plan.
"How long can we wait?" said Shyamal Acharya, deputy managing director at State Bank of India, after a meeting of lenders late on Tuesday. The bank is the leader of the 17-bank consortium and is directly involved with the loans.
Kingfisher Airlines, owned by the flamboyant Vijay Mallya, has not flown since October 2012 after operations were halted due to a cash crunch. Its lenders had first declared the company's loans in default in early 2012 but held back recovery after the carrier's promises of capital infusion.
Kingfisher said in December it was in talks with several investors, including gulf carrier Etihad for stake sale but those hopes have faded as the airline continues to be grounded and expands its losses.
Debt-ridden and with no customers, Kingfisher posted a 7.55 billion rupees loss in the three months to December 31 as its planes sat idle, and regulators rebuffed its revival plans.
A decision on further action will now be taken by the boards of the 17 creditor banks, after which the consortium will take decisions on valuing the assets and potentially pursuing legal options, Acharya said, adding it is a lengthy process.