Kingfisher Airlines shares snapped a five-day losing streak on Thursday. The stock saw buying interest after a letter written by chairman Vijay Mallya talked about the possibility of a limited restart of the grounded carrier.
Mr Mallya said the airline had submitted a detailed plan to the industry regulator to restart operations using seven planes by the start of the 2013 summer schedule, increasing to 21 planes in four months. The second phase of the plan would see it expand to 57 planes within 12 months of a recapitalisation, he said. (Read full text of letter)
The UB group has committed funding of approximately Rs 650 crore, Mr Mallya said, adding that the company was in discussion with multiple investors to secure a deal for the debt laden carrier.
Kingfisher shares closed 10 per cent higher at Rs 14.79 on the BSE. Other aviation stocks - Jet Airways and SpiceJet - closed with 1-2 per cent losses.
Kingfisher shares have lost over 6.5 per cent in the last week even as markets have hit a two-year high. The stock has fallen 12 per cent in the last month since December 11, 2012.
Kingfisher's licence expired on December 31, and a request to extend that will not be granted unless the suspended carrier can come up with an "acceptable" revival plan. The airline had submitted a revival plan in December, but that did not provide details of how it will fund operations.
Kingfisher has tried unsuccessfully to raise cash for more than a year, but there has been no breakthrough yet. Kingfisher, once India's second-largest airline by domestic market share, has been grounded by the aviation regulator for its failure to come up with a viable plan of financial and operational revival after a labour unrest in October led to the airline announcing a lockout.
Kingfisher Airlines has an exposure of Rs. 7,000 crore exposure to a consortium of 17 banks, led by State Bank of India, and debts of around Rs 8,000 crore.
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