NEW DELHI, India – Kingfisher Airlines’ Chairman and promoter, Vijay Mallya on Tuesday said that the company was not seeking any bailout and would now focus on high-end business. Mallya said that there will be no large scale layoffs but the company was looking at cutting costs.
“The government should consider allowing foreign direct investment (FDI) in aviation and reiterated that the company cannot afford to fly heavily loss-making routes. Entire issue in aviation space needs to be addressed, the whole sector is facing problems and the stated policy of the govt is to encourage FDI,” said Mallya.
Mallya said that Kingfisher was undertaking steps to reduce interest cost and streamlining of existing fleet order and has applied to govt for direct import of fuel. He said that the company has not asked for any kind of financial bailout from the government, but is only looking for working capital management assistance. He said he does not want government to dip into taxpayers’ money for Kingfisher.
“UB Holdings has created wealth for many shareholders. UB Group has demonstrated that whatever the cash needs of the airlines are have been met and the intention is to recapitalise the company,” Mallya said.
Commenting on new planes, Mallya said that Airbus is ready to reschedule delivery of new aircrafts including A380 models.
“Flights not cancelled because we could not afford to fly, we could have handled flight cancellations better, but to write the epitaph of the airline is not fair,” said Mallya. Mallya clarified that the cost of running an airline in India is high and Kingfisher is flying in a tough operating environment.
Mallya said that Kingfisher Airlines has raised Rs 800 crore in 2011 and is accountable to the banks and the company’s shareholders. Clarifying on debt, Mallya said that the repayment option is spread out and moartorium is for two years.
Mallya justified doing away with low cost Kingfisher Red and said that it is more prudent to focus on high end business. He ruled out report of Kingfisher Airlines shutting down and said there are other airlines whose debt is double than Kingfisher. He reiterated that the company has not handed over any advantage to Jet Airways by closing Kingfisher Red.
Mallya said that the company has been approached by strategic investors. Kingfisher Airlines has said that the company would ask banks for additional working capital facilities. The company has not asked banks to take a haircut or restructuring.
Kingfisher expects to join the OneWorld airline alliance in the first quarter of next year, Chief Executive Officer Sanjay Aggarwal told reporters.
OneWorld alliance members, which include Cathay Pacific, American Airlines and British Airways Plc, often use partners’ routes and flights to shore up their own networks.
Agarwal said, “Low cost service is not a viable model in India and there could be a blood bath happening in the low-cost business.”
He added that the companies operating performance is still very good.