Mallya Wakes up to Worries Each Day

Bad Weather even after FDI in Aviation

As more and more failure stories went on air against the airlines in the last few months, its CEO said KFA is in talks with foreign airlines and non-airline investors for a possible stake sale to ride out of the crisis, the Economic Times reported. Though Agarwal maintains that KFA is the best for a foreign airline to put money in after the government allowed 49 percent foreign direct investment in aviation, overseas carriers are skeptical about investing in the heavily-indebted company, which is the smallest among the six airline companies in India.

"We still are a viable business," said Aggarwal, while adding that his immediate priorities are to get the airline flying and paying salaries. He has also admitted, though the company is seeking 200 crore from banks and is in talks with a consortium of banks, "Banks have not rejected this proposal, but they are hesitant."

It is also said that the airline is getting a daily dose of capital infusion - close to 5 crore from the UB Group to sustain its regular operations and take care of its monthly salary bill, which is around 20 crore. Though, Agarwal refused to say how much money the group is giving on a daily basis, but said the money from sales and group money is what's helping the airline to stay alive.

"Foreign airlines do not want a domestic airline to have a big international network. This actually goes against their investment plan because then they are competing with the same airline. Even when we flew international, we had a limited international network and we would not be directly competing with any of these airlines. Now as far as the domestic network goes, we still have infrastructure, we still have staff, we still have 2 million loyal customers. At the end of the day, what any foreign airline is looking at is the network reach in India and you want to make sure that the network is tied with international arrivals and departures with that foreign airline," added Agarwal.

Reuters reports that Kingfisher has been scrambling to find investors. Though, it has said it is in talks with global airlines for investment, no airline has publicly expressed an interest so far. It also says that, Kingfisher's attractiveness is undermined not just by its debt but by a tough Indian operating environment that saw all but one major carrier lose money last year.
 

Why Then Kingfisher is Still Flying?

Many of the critics had the same doubt as the failing airlines was still running its business, where it could have been stopped much before, which could have saved some of the country’s money.

A reporter from Livemint.com says the answer to this question is that the airline’s chairman Vijay Mallya has ample political hold. The report gives another possibility of the government wanting to keep Kingfisher afloat in a desire to keep air tariffs low. It also points that the government may be afraid of the fall of this empire as it is (or it used to be) one of the biggest in terms of the amount it owes various banks and the number of people it employs. These could be the possible reasons why the ministry of Civil Aviation has consistently backed the airline and refused to cancel its license.

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