FDI will not lift KFA; Middle-East, SE Asia are keen:CAPA

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.