Mallya says nearing deal to save airline: report

The chairman of Kingfisher Airlines, Vijay Mallya, said in an interview with the Financial Times on Friday he was close to sealing a USD 370 million deal with an Indian private investor and a consortium of banks that would save the airline.

The Bangalore-based entrepreneur told the FT he was nearing a deal with 14 banks led by State Bank of India that would provide the loss-making carrier with working capital of 6 billion rupees (USD 118 million). He did not name the banks.

Mallya, a flamboyant liquor baron who owns a Formula One motor-racing team, told the paper he was finalising a separate USD 250 million equity injection from an unnamed wealthy Indian individual to recapitalise the cash-strapped carrier.

He added that he was about to conclude a deal with the banks to reduce the interest rate which the airline is currently paying on its USD 1.4 billion debt pile.

Shares in Kingfisher, which is named after its parent firm's best-selling beer, have lost around 68% of their value so far this year. The airline, which listed when it bought out budget airline, Air Deccan in 2008, has never made a profit.

The airline became India's No. 2 private carrier since it began operations in 2005 as the economy boomed but it has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.