SYDNEY: A full recovery of $1.4 billion in loans owed by embattled Indian carrier Kingfisher Airlines was unlikely in the short term and banks have told the airline to infuse equity, the chairman of State Bank of India said on Tuesday.
Kingfisher Airlines, controlled by liquor baron Vijay Mallya, last week won more time from lenders to develop a turnaround plan. It has never made a profit in the struggling Indian airline industry and has grounded most of its fleet.
"It is looking difficult unless they get fresh equity," Pratip Chaudhuri, chairman of State Bank of India said on the sidelines of an media event in Sydney.
"We have told Mallya either he has to get equity or pump in money from his liquor business." State Bank of India, the country's largest lender, heads the lenders' consortium.
Kingfisher, named after Mallya's flagship beer brand, had debt of $1.4 billion at the end of March. Most of its banks, which are largely state-run, declared its loans to be in default during the December quarter.
The No.2 lender, ICICI Bank, has unloaded its Kingfisher debt to a fund managed by SREI Infrastructure Finance .
Last week, lenders to the carrier, worried it will fall short in its efforts to find a big investor, told Reuters they were considering ways to recover their money including invoking securities and guarantees against their loans. AGENCIES