, MUMBAI, Dec 11 – Abu Dhabi’s Etihad Airways was again linked with a move into India on Tuesday, as a report claimed it was considering taking a 48-percent stake in stricken carrier Kingfisher.
The Mumbai Mirror, citing unnamed sources at the airlines, said the deal worth more than 30 billion rupees ($553 million) would be announced about December 18, the birthday of Kingfisher’s flamboyant boss Vijay Mallya.
The report, the most recent in a string about potential tie-ups between domestic and foreign carriers, came a week after Etihad was reported to be looking at Jet Airways, India’s biggest carrier by market share.
Kingfisher shares climbed nearly five percent on Tuesday, trading at 15.67 rupees in the early afternoon.
Etihad chief executive James Hogan told an Indian television channel last week that it was in talks in India to add to its foreign holdings, which already include stakes in Virgin Australia, Air Berlin, Air Seychelles and Aer Lingus.
But Indian aviation analysts expressed doubt that the group would be interested in Bangalore-based Kingfisher given its debt estimated at $2.5 billion by the Centre for Asia Pacific Aviation (CAPA), a Singapore-based consultancy.
“How does it make any financial sense? Why would you buy a company with zero sales and this kind of debt for so much money?” one aviation analyst for a major Mumbai brokerage who asked not to be named told AFP.
“Given its debt, without restructuring, it’s very unlikely anybody — a private equity investor or a foreign carrier — would buy into Kingfisher,” another Mumbai aviation analyst said.
The report came as the Mumbai Service Tax Commissioner S.K. Solanki said authorities had impounded a Kingfisher aircraft at the airport of the western city, according to the Press Trust of India.
The airline is also facing eviction from Mumbai airport for non-payment of parking and navigation charges.
A spokesman for Kingfisher, whose licence has been suspended by India’s airline industry regulator until it comes up with a “viable” revival plan, declined comment on the Mirror report.
Liquor baron Mallya has been scouting for an overseas buyer to save his airline from collapse since the government in September allowed foreign airlines to purchase up to 49 percent in domestic carriers.
Staff at the airline — named after Mallya’s biggest beer brand — ended a strike in late October over unpaid wages but Kingfisher’s fleet has remained grounded after India’s airline industry regulator suspended its licence.
CAPA ruled out chances in a recent report of any foreign airline buying into Kingfisher without the carrier first being recapitalised. It estimated Kingfisher would need at least $1 billion in funding to be turned around.
All Indian airlines, except privately owned IndiGo, posted losses in the financial year ending March 31 after struggling with over-expansion, high jet fuel prices and increased airport fees.