Bangalore, Sep 26 (IANS) Indian business tycoon Vijay Mallya is betting on foreign airlines to revive fortunes of his cash-strapped Kingfisher Airlines in the light of the government recently allowing 49 percent foreign direct investment (FDI) in the civil aviation sector.
"We are in talks with foreign airlines and other potential investors for equity stake in the holding company (UB Holdings Ltd.) of our airline. They are showing interest to invest as there is growth opportunity," a defiant Mallya told shareholders at the 17th Annual General Meeting (AGM) of the debt-ridden company.
Noting that it was only 10 days ago (Sep 14) that the government had announced the FDI policy in the aviation sector, Mallya said the conversation with potential investors, including some foreign airlines, could not be hurried.
"We are going as fast as possible. We can't go faster (than that) as the government had come out with the FDI policy only 10 days ago. Domestic investors are also excited because foreign carriers are showing interest to invest in our airline," Mallya told about 150 anxious shareholders who attended the AGM.
Mallya, who is also a Rajya Sabha lawmaker from Karnataka, declined to name the foreign carriers he was in talks with and how much equity stake they were looking to invest in his airline, which was the second-largest in market share in the last fiscal (2011-12).
"We should respect their (foreign airlines) privacy and confidentiality. So, status will take time. We are making efforts to re-capitalise with partners," Mallya asserted.
The loss-making private carrier is currently holding talks with the consortium of state-run and private banks on settling its cumulative debt (about Rs.8,000 crore/$1.45 billion) it raised from them over time.
"We meet them (banks) for routine issues. We had a meeting last month and will continue to have them to address all their issues," Mallya noted.
The next meeting with the lenders' consortium, headed by the State Bank of India (SBI), is scheduled Thursday in Mumbai.
"The promoters have infused Rs.1,154 crore (Rs.11.5 billion/$210 million) in the airline since April," Mallya said in reply to a shareholder's query on the observations of the auditors in the annual report.
Denying media reports that Kingfisher was flying only seven aircraft, Mallya said the airline has 40 aircraft and 15 aircraft were currently flying.
"We are looking for re-capitalisation to put the remaining 25 aircraft back in air, while we are flying 15 aircraft daily," the chairman claimed.
Asked how other private airlines and budget carriers like Indigo and SpiceJet were able to make or show profits, Mallya retorted that it was wrong to say some domestic airlines were profitable.
"None are making money on the domestic routes. Others use international revenue and show profit. One airline uses sales-and-lease-back model every month to show profit. As every airline is struggling, it was prudent for us to cut back capacity to contain losses," Mallya clarified.
On import of aviation turbine fuel (ATF), Mallya said Kingfisher Airlines was working with private firms and state-run oil marketing companies to facilitate supply of imported ATF to its aircraft.
The company reported a net loss of around Rs.651 crore ($117 million) for first quarter (April-June) of this fiscal (2012-13).
The airline has accumulated losses of about Rs.5,000 crore ($909 million) since its inception in 2005.
The airline also owes about Rs.300 crore to the exchequer in the form of taxes and other dues and another Rs.100 crore to New Delhi and Mumbai airport developers - GMR and GVK.
Mallya also blamed sustained negative media reports for the company's share price taking a beating.