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Mallya outlines revival plan for India's Kingfisher, shares surge

Source : REUTERS
Last Updated: Thu, Jan 10, 2013 09:50 hrs
Force India team principal Vijay Mallya waves in the paddock during the third practice session of the Indian F1 Grand Prix at the Buddh International Circuit in Greater Noida

Shares in grounded Indian carrier Kingfisher Airlines jumped as much as 9.7 percent on Thursday after a letter sent to staff from Chairman Vijay Mallya outlined plans for a revival to be funded with 6.5 billion rupees ($118.49 million) from his UB Group.

Kingfisher, which lost its operating licence at the end of 2012 and has not flown since the start of October, filed its plan, which included the same funding amount from UB, to regulators in late December.

Kingfisher, once India's second-largest airline, is estimated to owe $2.5 billion in debt to banks, staff, vendors and others. The airline has tried unsuccessfully for more than a year to bring in new investors.

In his letter to staff on Thursday, a copy of which was obtained by Reuters, Mallya said the airline had submitted a detailed plan to the industry regulator to restart operations using seven planes by the start of the 2013 summer schedule, increasing to 21 planes in four months.

The second phase of the plan would see it expand to 57 planes within 12 months of a recapitalisation, Mallya said.

Kingfisher shares were up 9.7 percent to 14.70 rupees, their daily high, in afternoon trade. The stock hit a record low of 7.05 rupees in August.

"All challenges, like the license cancellation, (are) known. Any revival plan would be good for shareholders," said Deven Choksey, managing director of broker K.R. Choksey.

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