New Delhi, November 15
Faced with increasing speculation over the fate of Kingfisher Airlines, its promoter Vijay Mallya went into damage control mode to allay fears that the airlines is shutting down and also denied that Kingfisher was seeking a bailout from the government.

However, he said the airline was bleeding because of high fuel costs and interest burden and emphasised that other airlines were in the same boat. Kingfisher’s main problem, he pointed out, was that it had not been able to raise equity though it had tried a couple of times. He also supported allowing FDI through foreign airlines in the aviation sector.

To tide over the crisis, Mallya is seeking help from banks to raise short-term funds to the tune of Rs 700-800 crore as working capital and interest concessions.

The usually flamboyant Mallya looked subdued during the lengthy press conference he held in Mumbai today flanked by Sanjay Aggarwal, CEO, Kingfisher and Ravi Nedungadi, CFO, UB group, which is the parent company of Kingfisher.

Mallya took several questions, including some uncomfortable ones. This is Mallya’s worst crisis in a long time and has enjoyed a spectacular run in diverse businesses from liquor to cricket and is known for being a showman.

Mallya said that "to write the epitaph of Kingfisher constantly is not fair." Ever since Kingfisher cancelled more than 200 flights since last week there has been speculation about its future and talk of a bailout package. Banks have also been cautious in promising any help to the beleaguered airline. Kingfisher today reported a loss of Rs 469 crore for the second quarter of this fiscal.

Mallya pointed out that operationally the airlines is doing better than others but the problem is access to funds given that the environment has become challenging. It is now trying again to raise equity and the company has filed a Rs 2,000 crore rights issue with market regulator SEBI to raise capital. It has also applied to Directorate General of Foreign Trade (DGFT) for direct import of jet fuel to reduce fuel costs drastically. Mallya said this is being done to save on the heavy sales tax and said that, “I have no hesitation in saying that state governments are making a windfall profit at the cost of the aviation sector”. Jet fuel costs are almost 50 per cent of the total operating costs of the airline.

Addressing a press conference, Mallya said he has not asked for a bailout from the government or for restructuring of loan from banks. Facing all-round attack from various quarters opposing any bailout for his airline, he said, "We have not asked for any bailout from government. We have not asked the government to dip into the taxpayers' money. We have never done it, we will never do it."

Maintaining that lessors had some funds as security for aircraft maintenance, he said "We are in dialogue with banks to open Letters of Credit for these lessors which we can use to recover debt and repay our high cost rupee loans."

Mallya also said that there were varied credit lines with various suppliers and vendors of the airline and refuted reports that certain lessors wanted to take back some of the leased aircraft in the Kingfisher fleet.

To questions on allowing foreign airlines to pick up stake in Indian carriers, Mallya said, "I am an avid supporter of FDI. I don't see any reason why FDI from strategic partners like an airline should be banned or not permitted. Who would understand an airline better than another airline? I hope government will consider it seriously.

"We need equity to improve the position of balance sheets, not just Kingfisher but the entire industry." Referring to cancellation of more than 200 flights over the past week, he said the cancellations have been blamed on wrong reasons.

"We cancelled flights not because we could not afford to. Commercial airlines are not expected to operate loss-making routes. Even today Kingfisher is operating the rest of its schedule. We could have handled the situation better. But it was a commercially prudent decision," he said.