Kingfisher Airlines problems have escalated as bank lenders said they could begin calling in 85bn Rupees of loans to the airline, adding that carrier founder, Vijay Mallya, had been given “enough time to repay”.
The 17 bank consortium, led by the State Bank of India, told the carrier to show signs of an investor or risk collapse.
Shyamal Acharya, deputy managing director at the State Bank of India, told reporters: “Banks have run out of patience. Consortium members felt that the matter has reached a dead end. Here is a case maybe for the termination of relationship. So we decided to consider recalling the loan.”
Kingfisher’s shares plunged on the news and Mallaya’s business and personal assets hang in the balance.
A further blow was dealt by the International Air Transport Association (IATA), which told the carrier it will be terminating its membership from the body if the airline fails to take to the skies again.
IATA said Kingfisher’s IATA Operational Safety Audit (IOSA) is about to expire within the month and, according to sources for The Economic Times, the carrier had failed to keep an ongoing audit.
Airline companies have to undertake an IOSA audit, which has a validity of two years and evaluates operational and control systems of the airline.