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Oct 20, 2012, 04.34 PM IST
Kapil Kaul, head of Center of Asia Pacific Aviation (CAPA), says that it is not a cancellation but a suspension. There was suspension earlier, this is basically legally and formalising the suspension.
Below is the edited transcript of the interview
Q: What is your view on this news?
A: It is not a surprise but on the expected line . Luckily, it is not a cancellation but a suspension. There was suspension earlier, this is legally formalising the suspension.
Q: Is it a fomalisation of what the partial lockout was or has been present since the first week of October?
A: Once the regulator doesn’t allow the airline to fly, it basically forms suspension. Today’s order could formalise the suspension. It is not any different from not allowing them to fly. It is a formal approach an already applied suspension.
Q: What is your opinion with regards to a possible revival plan which Kingfisher has to now submit to the DGCA in order to revive its operations in general. What according to you would be the most important contours of the revival plan?
A: First of all, they need to re-capitlise it. The total turnaround would cost over a USD 1 billion. Out of that USD 1 billion, USD 600 million would be required immediately and that is the first step towards any revival possibilities. Out of the USD 600 million, over USD 350-400 million has to be bought in by UB Group. So, the first step is to get UB Group to put in USD 350-400 million, and then the banks would make a pitch in with the balance of about couple of USD 100 or may be more. In second stage, two of foreign airline or any other financial or strategic investor would come in. At this point of time they need to recapitalise to USD 600 million and that can happen only when the promoter puts in USD 350-400 million. Without that there is no possibility of any revival.
Q: What is the possibility then that Kingfisher can revive its operations?
A: It depends on the promoter. For a while, there has been a speculation that the possible sale of United Spirits to Diageo would unlock some cash and a part of that cash would be invested into the airline. Every lender bank, institutions, everybody is speculating the same. Unless and until it gets one time capitalisation of above USD 600 million.
I am not sure that revival will happen and it looks very difficult. It depends upon the promoters of the UB Group to put about USD 350-400 million and that’s largely dependent on the Diageo sale as and when that happens. Frankly, I don’t see that happening. If it was to happen it could have happened long before. If there are any chances of revival that depends on the UB Group first putting in about USD 350-400 million and then the banks support it with another couple of USD 100 million
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