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Sep 17, 2012, 03.06 PM IST
Kapil Kaul, CEO, South Asia, CAPA (Centre for Asia Pacific Aviation) explains to CNBC-TV18 that the allowing of FDI in the aviation does not come as blessing for Kingfisher Airlines as overseas investors will not be interest until the promoters invest USD 300-400 million.
India's structural challenges would drive away even the most optimistic investor, but eventually over a period of time I think it will change.
CEO- South Asia
Kapil Kaul, CEO, South Asia, CAPA (Centre for Asia Pacific Aviation) explains to CNBC-TV18 that the allowing of FDI in aviation does not come as a blessing for Kingfisher Airlines as overseas investors will not be interest until the promoters invest USD 300-400 million. Kaul also forecasts that the interest will not be from Europe or the US, but from the Middle-East and Southeast Asia.
Below is an edited transcript of the reaction on CNBC-TV18.
Q: Do you believe that there will be foreign investors in the aviation sector?
A: First of all, we at CAPA strongly welcome this announcement and believe that this was long overdue. Unfortunately, it was denied to the industry for the last 15-16 years and I must complement the minister for doing what none of his predecessors could do. I think it is a very important milestone and I am quite sure that in the near-term it will bring in strategic capital. It will also bring financial capital and expertise. So, I think we need to strongly welcome it.
Q: Will SpiceJet and GoAir benefit the most?
A: Yes, I think that SpiceJet and GoAir would be the immediate beneficiaries, though it will not be so easy as the due diligence has not begun.
Q: How difficult will it be for Kingfisher?
A: For Kingfisher, the situation is very difficult. But though there are high hopes of foreign investment, it remains to be seen if the promoter will invest USD 300-400 million in equity. And without that I don't think any restructuring is possible.
Q: But a strategic investor taking a call over a financial investor as a long-term play may perhaps improve the situation?
A: My view is that the promoter first has to put USD 300-USD 400 million followed by the banks two and the foreign investors would come in last.
Q: Who are the international carriers that would be interested?
A: I think it would be tough to expect foreign interest till the money comes from the promoters and the banks agree to take a hair cut. What is required is a one-time, decisive investment of capital and Mallaya may require USD 600 million immediately and almost a USD 1 billion in stages. So, it is going to be difficult.
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Action in Kingfisher Airlines
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