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Kingfisher Airlines: Govt bailout out of question, says Aviation Minister Ajit Singh

Civil Aviation Minister Ajit Singh says bailout of the Vijay Mallya-owned airline is out of the question as asking banks to extend debt repayment duration would mean the government was supporting the airline.

BT Online Bureau | January 11, 2012 | Updated 14:37 IST

Refuting media reports on Kingfisher Airlines requesting the government for a bailout, Civil Aviation Minister Ajit Singh on Wednesday ruled out the possibility, adding that the government will also not "put in a good word" to the banks on behalf of the airline.

Singh further said that both Directorate General of Civil Aviation and the government are firm on safety norms to be followed by Indian airlines and would not compromise on them.

Burdened by debts and losses, Kingfisher was reported to have sought government help on extending the time for repaying the banks and credit. Singh said the government would not put in a good word to banks as even that would mean the government was supporting the airline.

"Banks have to go by the norms set by Reserve Bank of India. Unless they are satisfied with business plan, how can they lend money? Government is in no position to bail out a private enterprise," Singh said.

"The cash-strapped airline will require help to pay creditors to avoid grounding aircraft," Kingfisher Airlines chairman Vijay Mallya is said to have written in his letter to Singh, the Financial Express reported on Tuesday.

"Our lessors have gone to court in London against non-payment of lease rentals. If we don't clear dues, our aircraft will be grounded," Mallya was reported as writing.

Singh had said last week that the government will not cancel licences of cash-strapped carriers on safety concerns, adding that the ministry would provide help to the sector.

Kingfisher was forced to cancel hundreds of flights late last year and ground aircraft to conserve cash, and has been negotiating with banks for a further cushion to ease its debt burden and to raise working capital.

In the recent weeks, Mallya has held a series of meetings with top government functionaries, including Finance Minister Pranab Mukherjee, to work out steps to keep the airline afloat.

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