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Kingfisher Airlines plan to raise USD 400 million back on track: Mallya

According to a PTI report, after the Annual General Meeting (AGM) of Kingfisher Airlines held in Bangalore yesterday, Vijay Mallya, Chairman, Kingfisher Airlines informed the media at a press conference that the airline’s plans to raise USD 400 million is back on track as private investors have shown keen interest in investing in the airline. “Our plan for raising USD 400 million is on track. Private equity investors are showing increased amount of interest as the future of civil aviation industry in India is looking bright,” said Mallya. However the time-frame for the initiative and extent of equity stake that the airline will dilute was not mentioned.

“There is no reason why private equity investors who had expressed interest earlier when oil (crude prices) was at USD 100 a barrel, shouldn't be more interested when oil is USD 36 a barrel,” stated Mallya. While addressing the media, Mallya also stated that the two new routes including Mumbai-Hong Kong and Mumbai-Singapore are set to take off on January 12, 2009 and January 15, 2009 respectively. Some of the other direct international routes in the pipeline are between Bangalore and Colombo, Malaysia, Dubai, Singapore and Bangkok. The aircraft to be used for these routes will be A321s.

When questioned if the airline is expected to break-even in the next fiscal (2009-2010) Mallya said, “We are certainly optimistic. If all things go well in the next five days (till December end), the airline should break-even (operationally) in the current month itself when its revenue (passenger, cargo and ancillary revenues put together) is expected to be close to Rs 500 crore (in December alone).” Mallya further informed that Kingfisher Airlines and Jet Airways were not looking at picking up stake in each other’s company. He also opined that unless the government reduces the Sales Tax on ATF prices to four per cent, airlines in the country will not cut domestic air fares.

“Domestic fare cuts are really dependent on government policies in terms of Sales Tax on fuel. Once the government gives ATF the Declared Goods status, bringing down Sales Tax to a uniform four per cent, airlines in India will cut fares. Airlines in India have "accumulated burden" when the crude oil prices were at USD 147 a barrel. We still continue to pay an average of 26 per cent Sale Tax without any relief whatsoever. We also need to generate enough cash to pay oil marketing companies and Airport Authority of India (AAI).”

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