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The airline is confident of an equity infusion of between $500 million and $600 million through a mix of fresh funds as well as capital from the banks, said Sanjay Aggarwal, CEO of the debt-laden company. Aggarwal's optimism is based on expectations that private equity investors will find the low valuations attractive, coupled with the hope of achange in foreign investment rules allowing global airlines to invest in local carriers.
In an interview, the first after the recent imbroglio over frozen bank
accounts, unpaid bills and a fast depleting roster of employees hit the
headlines, Aggarwal insists that the agony will soon be over. Aggarwal,
an industry veteran who was among the 40 top executives out of 40,000
employees in US Airways, before it was acquired by United Airlines, is now more attuned to the Indian aviation sector.
During the interview, his desk was strewn with copies of dockets detailing the turnaround that he piloted in another situation in a rival airline. "The process (to give the deal a tangible shape) takes 6-8 weeks and we are aiming to get the investors in by then. We have a mix of investors but will not be able to disclose further details," Aggarwal said.
Six Planes Back in the Air
"We are approximately looking at a $500-million infusion. We have requested banks for non-fund based limits and so between fresh money and some of the non-fund based limits could be the total solution," he said.
Kingfisher plans to get six of its grounded aircraft back in the air by next week, adding to the 28 it is currently flying. It is in a process of submitting a summer schedule to the civil aviation regulator that will target getting more aircraft off the ground as it has 20 engines that can be mounted on the aircraft once the payments are made.
Aggarwal was at the helm of SpiceJet, when the low-cost airline was scripting a turnaround but quit when media baron Kalanithi Maran acquired the airline and brought in his own team to manage the airline. However, it was during Aggarwal's tenure that SpiceJet maneuvered itself out of turbulent weather, enabling Wilbur Ross, vulture investor to exit in favour of Maran. Ross is one of the few investors in the Indian aviation industry to exit profitably.
Aggarwal, however, did not specify how much stake will be offloaded if a private equity player comes in but said that the promoters will be in a comfortable position even if a 49% holding is offloaded in Kingfisher as they will still be able to retain 40% . Aggarwal said he sees no reason why private equity players would not like to invest in the airline business.
"SpiceJet had Goldman Sachs (invested $20 million to later exit at a loss) and Istithmar (Dubai-based investment company that also bought equity into airline) along with Wilbur Ross. Both Goldman and Istithmar got money and security and the environment also turned favourable for SpiceJet. So it cannot be said that private equity is not a good option for airline companies."
Aggarwal, however, denied being in talks with Wilbur Ross and also with Hong Kongbased firm S C Lowy for Kingfisher. "They are distress funds and we do not want to take that route. Though there was just one feeler and some talks with Lowy but since they are a vulture fund, we did not take it further."
During the interview, his desk was strewn with copies of dockets detailing the turnaround that he piloted in another situation in a rival airline. "The process (to give the deal a tangible shape) takes 6-8 weeks and we are aiming to get the investors in by then. We have a mix of investors but will not be able to disclose further details," Aggarwal said.
Six Planes Back in the Air
"We are approximately looking at a $500-million infusion. We have requested banks for non-fund based limits and so between fresh money and some of the non-fund based limits could be the total solution," he said.
Kingfisher plans to get six of its grounded aircraft back in the air by next week, adding to the 28 it is currently flying. It is in a process of submitting a summer schedule to the civil aviation regulator that will target getting more aircraft off the ground as it has 20 engines that can be mounted on the aircraft once the payments are made.
Aggarwal was at the helm of SpiceJet, when the low-cost airline was scripting a turnaround but quit when media baron Kalanithi Maran acquired the airline and brought in his own team to manage the airline. However, it was during Aggarwal's tenure that SpiceJet maneuvered itself out of turbulent weather, enabling Wilbur Ross, vulture investor to exit in favour of Maran. Ross is one of the few investors in the Indian aviation industry to exit profitably.
Aggarwal, however, did not specify how much stake will be offloaded if a private equity player comes in but said that the promoters will be in a comfortable position even if a 49% holding is offloaded in Kingfisher as they will still be able to retain 40% . Aggarwal said he sees no reason why private equity players would not like to invest in the airline business.
"SpiceJet had Goldman Sachs (invested $20 million to later exit at a loss) and Istithmar (Dubai-based investment company that also bought equity into airline) along with Wilbur Ross. Both Goldman and Istithmar got money and security and the environment also turned favourable for SpiceJet. So it cannot be said that private equity is not a good option for airline companies."
Aggarwal, however, denied being in talks with Wilbur Ross and also with Hong Kongbased firm S C Lowy for Kingfisher. "They are distress funds and we do not want to take that route. Though there was just one feeler and some talks with Lowy but since they are a vulture fund, we did not take it further."
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