IAG and Etihad identified as Kingfisher suitors

IAG and Etihad identified as Kingfisher suitors

The future of Kingfisher Airlines could be decided within days, amid reports that British Airways’ parent IAG and Etihad Airways are considering taking stakes in the Indian carrier.

However, the level of Kingfisher’s debt - it owes £810 million - and restrictions on the size of any stake may make IAG (International Airlines Group) chief executive Willie Walsh think twice about a deal.

Kingfisher controlling shareholder Vijay Mallya said on Monday he hopes the cash crisis at the Indian carrier can be resolved by next week. The airline needs an immediate cash injection of £160 million to survive.

The Times quoted Mallya, who controls 58% of Kingfisher, as saying he is in talks with “two foreign carriers” about a rescue. Sources in India identified the carriers as IAG and Etihad.

India’s government is poised to announce changes to rules on the ownership of airlines which would allow foreign carriers to take stakes of up to 49% in Indian airlines.

However, IAG said it was “too early to speculate about IAG interest in India” and Etihad said: “We talk regularly to many airlines.”

IAG has previously identified Kingfisher as a potential target. The Indian carrier was due to join BA’s Oneworld alliance next month, but this has now been postponed.

Kingfisher is currently operating less than half its network - flying 28 aircraft from a fleet of 64 - but continues to operate daily from Heathrow to Delhi and Mumbai.

In India, the carrier has pulled out of cities including Jaipur, Thiruvananthapuram and Hyderabad.

Mallya conceded on Monday that “a large number of employees” have left the airline over unpaid wages. But he told remaining staff: “I have organised funding so we can pay your seriously overdue salaries.”

The Kingfisher chairman also heads India’s United Breweries. He told The Times he is considering selling part of the liquor group, which includes Whyte & Mackay whisky, to raise cash.


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