As Kingfisher airlines struggles to stay afloat, the banks that hold it's debt are in a dilemma. After classifying the loans as Non performing assets(NPA), they are staring at the prospect of a complete write-down. This may have prodded some of these institutions to think of providing further assistance.
Advising caution on additional funding to the aviation sector, Naresh Takkar, chief executive and managing director, ICRA, said given the scale of exposure to the ailing carrier, a ‘too-big to fail’ status may have been behind the readiness to offer additional support. However, he added it was not clear how banks would secure their interests for extra funding.The taxpayer is already heavily exposed financially to the airline:
The government, which owns about one-fifth of Kingfisher’s shares and roughly three-quarters of its debt through lenders, was non-committal.Running an airline and making money in India is hugely unrealistic.If Kingfisher wants to pursue this fantasy, they should be made to pledge their own solvent assets as collateral.
