Kingfisher Air runs up Rs 4k-cr debt

Kingfisher Airlines, owned by liquor baron Vijay Mallya, has run up a debt of Rs 4,000 crore. The airline, which is merging with Deccan Aviation, is understood to have a top line of around Rs 3,000 crore and is expected to make losses of Rs 900 crore on a yearly basis. This is in addition to the losses of around Rs 650 crore suffered by Deccan Aviation.
 
Sources in Mallya's UB Group confirmed the debt levels but no official statement was available. Kingfisher, which is gearing up to fly on international routes, is burdened with such a huge amount of debt as the company, like its peers, is struggling to cope with the rising prices of Aviation Turbine Fuel (ATF).
 
Recently, Kingfisher took charge of a new Airbus aircraft (A330-200), which is expected to be used on international routes connecting Bangalore to London and San Francisco.
 
"As of today, we have raised a total debt of Rs 4,000

crore for Kingfisher. We had chalked out a $250-million fundraising plan through the equity route when we took over Deccan Aviation. However, due to adverse market conditions, the valuations were down and we were forced to defer the plan resort to further debt," a senior finance official of the UB Group said.
 
Kingfisher Airlines recently raised Rs 1,000 crore debt, a large chunk of which came from ICICI Bank.
 
The merger between Kingfisher and Deccan Aviation was approved by the Karnataka High Court in July this year. The court approval came seven months after both the companies decided to unite in a Rs 1,000-crore, two-step deal which resulted in UB Holdings holding around 51 per cent in the merged entity.
 
This combined firm has a fleet of around 80 aircraft connecting 64 Indian cities. The airline has a market share of over 30 per cent.