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'Two airlines are doing everything to ensure Kingfisher collapses'

Kingfisher Airlines' chairman Vijay Mallya says he is in discussions with an investor who has made me a proposal that could be upward of Rs 1,000 crore.

Suman Layak and Geetanjali Shukla         Print Edition: Dec 11, 2011

At the end of a day full of meetings to salvage Kingfisher Airlines, Vijay Mallya met Suman Layak and Geetanjali Shukla at his office in Nariman Point, Mumbai. It was so late that by the time the interview ended, the clock had ushered in a new day. Through much of the interview, the liquor baron sipped red wine and smoked his favourite cigars. Edited excerpts:

On finding a strategic investor for Kingfisher Airlines:
Without waiting for policy change and FDI, my priority has been to recapitalise the airline with equity and not with more debt. I am in discussions with an investor who has made me a proposal that could be upward of Rs 1,000 crore. I have applied to banks for working capital worth Rs 600 crore, which will be secured by current assets. There will be a dilution of stake.

On the way to cut costs:
In December 2010 when the banks appraised our viability, we were clearly viable at 11 per cent rate of interest. Now that rate has gone up to 14 per cent. So we have to reduce our interest cost. I want to take back the maintenance deposits with our lessors and give them bank guarantees. I will take that Rs 1000 crore or so and use it to reduce debt. That will shave Rs 140 crore from the interest burden. And I also want to take the benefit of the 15 per cent cash discount offered by the Airports Authority of India and pay them cash instead.

On using United Breweries to bail out Kingfisher:

For a more detailed interview go to
First of all, I want to clarify that there are no shares of United Spirits (or) my core businesses that are pledged for Kingfisher loans. Kingfisher's loans are primarily secured against Kingfisher's assets, both fixed assets and current assets. The mother company is UB Holdings, that has put money into Kingfisher. United Spirits and United Breweries are not connected at all with Kingfisher Airlines. Under the master debt recast terms of December 2010, our entire shareholding in Kingfisher Airlines, alone, is pledged to the banks.

On the attitude of politicians:
I have so many chief ministers coming to me and asking for intra-state connectivity. But they will tax aircraft fuel in a highly unreasonable way, which is killing the aviation industry. I am used to paying high taxes because I run a liquor business, which is the most highly taxed in the country. State governments have an insatiable thirst for revenue. I have senior politicians from Maharashtra who want me to fly to Nashik, Nanded, Latur, Solapur… they want me to fly everywhere.

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