This is the week that Kingfisher feared was coming

Victoria
By Victoria July 2, 2012 07:56

This is the week that Kingfisher feared was coming

Kingfisher Airlines is this week facing fresh renewed pressure from lenders and other companies with whom it finds itself indebted to. The difference this week from others before it is that lenders are to meet to ensure that at least some of the securities and guarantees are invoked. These measures are likely to be taken now as it seems clear to them that Indian government approval of foreign direct investment in airlines is not around the corner.
In fact Kingfisher Airlines is yet to repay debts due after some of the guarantees issued by banks were invoked by other agencies for non-payment over three months ago. As a result, the banks, who have an exposure of over Rs 7,000 crore (US$1.2bn even though the Rupee has fallen so much against the greenback this year) riding on Kingfisher, have classified the loan as a non-performing asset and have already set aside over Rs 1,000 crore (US$171m).
The Airports Authority of India (AAI) on Friday told Kingfisher that unless the airline’s debts of Rs 270 crore are diluted on a regular basis, it will not allow Kingfisher aircraft to leave the country. The lessors had wind of this and that is why they acted to get their metal back but as we understand it they were too late (you know who they are). This is a lessor’s worst nightmare. The only reason for such a public statement by the AAI was to let the lessors know that they will not be able to repossess their aircraft (seeing as Kingfisher has no international operations). This is going to be a costly scenario for lessors and is a terrible blow given that they showed so much faith towards Kingfisher. AAI has already filed a criminal case against Kingfisher over unpaid debts, as it is with the courts the lessors are in for a hard time. Kingfisher is going to leave a terrible mess in its wake.
Look out for oil and FX: Oil surged back towards $100 a barrel on Friday while the euro and Indian rupee also surged with the latter moving back below 56 to the US Dollar.

Victoria
By Victoria July 2, 2012 07:56
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