Kingfisher in stake sale talks with Etihad, others

NEW DELHI Tue Dec 11, 2012 6:20pm IST

A passenger walks past a near-empty Kingfisher airlines ticketing office at Mumbai's domestic airport March 27, 2012. REUTERS/Vivek Prakash/Files

A passenger walks past a near-empty Kingfisher airlines ticketing office at Mumbai's domestic airport March 27, 2012.

Credit: Reuters/Vivek Prakash/Files

Stocks

   

NEW DELHI (Reuters) - Kingfisher Airlines (KING.NS) said on Tuesday it was in talks with Abu Dhabi's Etihad Airways and other investors about taking a stake in the grounded and indebted Indian carrier.

Kingfisher shares rose near to their daily limit of 5 percent after a local newspaper reported that Etihad was close to buying a 48 percent stake in the carrier, controlled by its flamboyant chairman Vijay Mallya, for a little over 30 billion rupees.

"We would like to clarify that the company is in discussion with various investors, including Etihad Airways, for equity investments in the company," Kingfisher said in a statement.

It gave no further details as to the possible size of the stake or the price anyone would pay. Etihad Airways declined comment.

A formal announcement of a deal could come around December 18, the birthday of Mallya, according to the Mumbai Mirror, a tabloid known mainly for coverage of local news. It did not say how it got the information.

Kingfisher has been trying for more than a year to find an investor, with no foreign carrier publicly expressing an interest in taking a stake.

Battling stiff competition and high operating costs, Indian carriers have been in talks to sell minority stakes to foreign airlines. Etihad has been eyeing a stake in Jet Airways (JET.NS), India's largest airline by total passengers carried, a source said recently.

"I do not think any foreign airline would be interested in Kingfisher unless promoters infuse money into the company, at least 40-50 billion rupees," said Rashesh Shah, an aviation analyst with ICICI Securities, who has suspended coverage of the stock.

Industry expert Rajan Mehra, the India head of U.S.-based private jet operator Universal Aviation, said an Etihad investment in Kingfisher was possible.

But he said the reported price sounded high and Etihad would not want to take on all of Kingfisher's debt.

Its total debt is estimated at roughly $2.5 billion, according to the Centre for Asia Pacific Aviation consultancy.

Kingfisher's market value is about $231 million.

"They can get an airline which is in a mess, which can be bought at a reasonable price, and which gives them access to the captive domestic market," said Mehra, who previously headed Qatar Airways' India operations.

Abu Dhabi-based Etihad would initially buy a 30 percent Kingfisher stake in December and a further 18 percent by next August, the newspaper said.

Kingfisher, once India's second-largest airline by domestic market share, has struggled to pay staff for much of this year and has not flown since early October due to staff protests and safety concerns.

Kingfisher's often-volatile shares closed up 4.7 percent, effectively at their 5 percent daily limit, at 15.60 rupees on Tuesday. They have more than doubled since hitting an all-time low of 7.05 rupees in August.

(Additional reporting by Stanley Carvalho in Abu Dhabi; Editing by Matthew Tostevin)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage