Grounded Kingfisher lacks funding plan - Ajit Singh

NEW DELHI (Reuters) - Grounded carrier Kingfisher Airlines (KING.NS) has failed to present regulators with a clear funding plan under a proposal to get it flying again, Aviation Minister Ajit Singh said on Wednesday.

The airline, owned by liquor tycoon Vijay Mallya and suspended in October over unpaid debts and salaries, submitted a plan on Monday to the Directorate General of Civil Aviation (DGCA) to resume a limited service.

According to local media reports, Kingfisher's parent company, UB Group, offered to inject 6.5 billion rupees into the carrier - a key condition for getting it airborne again.

But Singh told reporters on Wednesday that UB "did not say they are going to give anything" to Kingfisher, which has estimated debts of $2.5 billion.

He did not specify if the proposal, to resume operations with five planes, had been rejected. But he noted that the airline owed money to banks, staff, airports, and tax authorities.

All those stakeholders needed to be convinced the relaunch plan was viable before the DGCA allowed the airline to fly again, Singh said.

Kingfisher, which has been trying unsuccessfully to raise fresh cash for more than a year, is hoping to tap Etihad Airways as an investor.

The Gulf carrier, which is seeking to widen operations in India and other Asian markets, is in the final stages of talks to buy part of either Kingfisher or Indian rival Jet Airways (JET.NS), an Indian government official said last week.

Last month, Diageo Plc (DGE.L) bought a majority stake in United Spirits (UNSP.NS), also a UB Group company, for $2.1 billion. UB did not specify if part of that money would be injected into Kingfisher.

Kingfisher shares erased intraday gains of as much as 3.8 percent on Wednesday to end flat on the day.

(Reporting by Anurag Kotoky; Editing by Rafael Nam, John Stonestreet)