White knight Etihad Airways to Kingfisher Airlines’ rescue

kingisherKingfisher Airlines is not ready to submit to the proverbial straw that breaks the camel’s back. Not yet. It may have found its white knight in Middle-East carrier Etihad Airways, which is said to be interested in acquiring a 48-per0cent stake in the debt-ridden Indian carrier.

The airline is saddled with problems to the brim: it runs a debt of US$2.5bn, staff are on strike for not being paid their wages, the authorities have grounded the airline, and banks have refused to provide any more loans. Launched in 2005, Kingfisher has never made a profit.

Here comes Etihad Airways with the deep pocket, keen to expand into the Indian market (as it is elsewhere). Kingfisher provides the opportunity although it was said that Etihad was originally interested in Jet Airways, India’s largest airline by total passengers carried.etihad

Kingfisher issued a statement to confirm Etihad’s interest: “We would like to clarify that the company is in discussion with various investors, including Etihad Airways, for equity investments in the company.” According to the Mumbai Mirror, the deal would cost just over 30bn rupees (US$552m). It would be in two phases: an initial 30-per-cent in December and a further 18-per-cent by August next year. A formal announcement is expected within days.

This news comes on the heel of reports that AirAsia chief Tony Fernandes was in India looking for opportunities to take advantage of India’s relaxation on foreign ownership. But Mr Fernandes denied any interest in embattled Kingfisher. Interestingly, Mr Fernandes was largely reputed for turning a debt-ridden airline which he bought from the Malaysian government for one ringgit (US$0.26) along with debts amounting to US$11m into Asia’s largest budget carrier.


About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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