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Rediff.com  » Business » Kingfisher in talks with investors on GDR: Mallya

Kingfisher in talks with investors on GDR: Mallya

Last updated on: June 06, 2011 12:26 IST

KingfisherWith jet fuel prices starting to move downwards, Kingfisher Airlines has resumed talks with investors for issuing global depository receipts to raise around $300 million, its owner Vijay Mallya said on Monday.

"We had to postpone GDR issue as the fuel prices were going sky high. When we had planned this out, it was on the basis of the fuel prices remaining at around $90 per barrel.

But the prices shot up to $120.

So clearly, it had to be postponed. Now with the fuel prices coming down, the investors are engaged with us," he said.

The carrier had planned a GDR issue in December last year to reduce its debt but had failed to do so as its stock prices began slumping.

The company has appointed Citi, JP Morgan and CLSA as its merchant bankers.

Mallya, who is here to attend the annual general meeting of the International Air Transport Association, also announced that his carrier would join the 'oneworld' alliance of airlines in February next year.

Confirming this, 'oneworld' chief executive office Bruce Ashby told PTI, Kingfisher and Europe's 5th largest airline 'airberlin' have already signed agreements to become members-elect to join the alliance early 2012.

Malaysian Airlines joined today as a full-fledged member of the alliance.

Mallya said he would 'continue to press the government to review its aviation FDI policy' to allow foreign airlines to pick up stake in Indian carriers.

"The Prime Minister is constantly encouraging FDI into India in all sectors.

There is 100 per cent FDI in airports.I don't see any reason in excluding foreign airlines from investing in Indian carriers.

"A general investor will be less attracted to invest in the aviation sector given its volatility," he said.

He wanted the government also to reduce taxes on aviation turbine fuel, especially the sales tax imposed on it by state governments.

"Several chief ministers want me to fly to their states, to new cities. But my pleading has been reduce sales tax on aviation turbine fuel", he said.

Talking about fleet induction and international route network, Mallya said "we will evaluate our capacity deployment (strategy), particularly on our London and Hong Kong routes, and leverage the benefits of joining the 'oneworld'.

Joining the alliance will require us to have a relook on our own fleet and route expansion plans. We need to review our deployment of wide-body aircraft on international routes".

British Airways and Cathay Pacific, based in these two cities, are members of the alliance.

Observing that ultra long haul flights, like those between India and the US, were 'economically unviable', the liquor baron said "we have applied to the government for allowing us to codeshare with American Airlines (another member of 'oneworld'). They already fly to between Delhi and Chicago.

"Flights between India and New York have a potential for addition". He, however, did not clarify whether Kingfisher would launch a flight on that route in future.

Mallya also said Kingfisher has 'not cancelled' its orders for buying five Airbus superjumbo A-380s 'but postponed it for good reasons. Besides A-380s, we also postponed inducting A-350s and other aircraft'.

He said the aircraft, which Kingfisher had ordered for deliveries starting 2008-09, would be coming in from 2012-13.

To meet the gap between growing air traffic (demand) and lesser number of aircraft (supply), Mallya said, "We are looking for lease capacity on both wide and narrow body aircraft".

Amitabha Roychowdhury in Singapore
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