India's ailing Kingfisher fights to keep flying

The board of India's struggling Kingfisher Airlines met on Monday to look for ways to slash the company's debt and keep the country's second-largest carrier flying. Members are considering a sale of property to raise funds for the airline, headed by billionaire liquor baron Vijay Mallya, a banker said, while a company spokesman declined to comment. The loss-making airline, India's second-biggest by market share, has cancelled more than 200 flights in the past week, raising fears it could go bankrupt. "One of the options being discussed with the airline is a sale of some of its assets," State Bank of India's managing director Hemant Contractor told reporters. "We have to be satisfied about the viability of the company. There is no point restructuring (debt) if the company's operations are not going to be viable." State Bank of India, India's largest commercial bank and Kingfisher's biggest lender, has asked the airline to raise fresh capital before any debt restructuring. Contractor said that the airline was being asked to raise around eight billion to 10 billion rupees ($160 million to $200 million), the Press Trust of India reported. Kingfisher, along with other private Indian airlines, has been caught in a "perfect storm" of rising fuel costs, a price war and overambitious fleet expansion, analysts say. The struggling sector was once a vibrant symbol of India's economic progress but it has seen its fortunes nosedive. Just one of India's main carriers has said it is in profit -- budget airline Indigo. The company, which was due to report its quarterly results on Monday, said late in the day it would make the announcement on Tuesday. Kingfisher's shares soared 8.7 percent to 21.35 rupees, underpinned by hopes that the airline will find some means to keep aloft. The surge came after its stock tumbled to an all-time low of 17.55 rupees on Friday. Kingfisher has debts of at least $1.2 billion and the Economic Times newspaper said the board was looking at ways to more than halve the debt. As well as selling property, Kingfisher's parent UB Group might convert more loans into equity, and could try to renegotiate lease agreements for planes. The management is also expected to try to sell more shares to existing investors on preferential terms, with the banks pushing Mallya to put more money into the ailing company. The airline started operations in May 2005, offering five-star service to its passengers. Kingfisher has denied its financial future is in peril, but has approached banks and the aviation ministry in New Delhi to help resolve the crisis. It said last week it would cancel 50 flights every day until November 19 as part of fleet and network restructuring plans after announcing earlier it was axing its low-cost service to cut costs. India's industry has reacted strongly to Kingfisher's pleas for help. "If it's a free-market economy, those who die must die," Rahul Bajaj, chairman of motorbike and scooter giant Bajaj Auto, told reporters. "I am a proud private-sector man and don't see the logic of bailing out any private company, either for the sake of employees or customers," Bajaj added.