Gulf airlines say no interest in Kingfisher stake

By Praveen Menon and Indulal PM

DUBAI/MUMBAI (Reuters) - Two major Gulf Arab carriers said they have no interest in taking a stake in struggling Indian carrier Kingfisher Airlines , which is grappling with a pile of debt and on the hunt for fresh equity.

Abu Dhabi's state-owned Etihad Airways and Qatar Airways said on Thursday they were not inclined to invest in Kingfisher.

Sources in India familiar with the matter told Reuters that Kingfisher was in early talks with Qatar Airways about a possible stake in the company. The Indian carrier is also known to have met officials at Etihad, one source said.

"We have no interest in Kingfisher," a spokesman for Qatar Airways said.

Etihad's Chief Executive James Hogan told Reuters that they too had no interest in the Indian carrier. He declined to elaborate.

Kingfisher, controlled by liquor baron Vijay Mallya, has said it is in talks with potential investors. Kingfisher officials did not immediately respond to a request seeking comment.

The carrier has failed in its long-running efforts to bring in fresh equity. Its banks are stuck with a quarter of Kingfisher's shares after a debt recast and lead lender, State Bank of India , refuses to lend more in the absence of an equity injection.

The cash-strapped carrier said last month that it had began talks with SC Lowy Financial, a Hong Kong distressed debt firm, in a sign it may be running out of more attractive traditional funding options.

One of the sources said Kingfisher was also talking with U.S. private equity firm WL Ross. Officials at WL Ross did not immediately respond to a request for comment.

Backed by sovereign wealth from oil-producing states, Gulf carriers have been on an aggressive acquisition drive in Europe, picking up stakes in debt-ridden airline companies.

Etihad, which is owned by Abu Dhabi, increased its stake in Air Berlin