Kingfisher Airlines [ Images ] is negotiating with the State Bank of India [ Get Quote ], the country's largest bank, for a working capital loan of over Rs 2,000 crore (Rs 20 billion). The money will be used for clearing fuel bills.
SBI executives, however, said the sanctioned amount was likely to be lower.
Industry sources said the carrier owed over Rs 620 crore (Rs 6.2 billion) to BPCL [ Get Quote ] and HPCL [ Get Quote ], besides Rs 160 crore (Rs 1.6 billion) to IOC. However, Kingfisher Airlines is not the only company with oil dues.
"Raising funds is an ongoing issue and because we are bound by confidentiality and non-disclosure agreements, it will be inappropriate to offer any comment at this stage," a Kingfisher spokesperson said.
The payment of aviation turbine fuel dues has been an issue for all major airlines.
On October 23, 2008, oil companies gave airlines a breather on dues worth Rs 2,900 crore (Rs 29 billion), which were to be paid in six monthly instalments till March 31, 2009.
Subsequent purchases from the date of that announcement were given credit of 90 days. Sources said airlines were defaulting both on instalments and current purchases.
Kingfisher Airlines, Jet Airways [ Get Quote ] and state-owned Air India [ Images ] started this financial year with accumulated dues of Rs 4,000 crore (Rs 40 billion) to oil companies and airports, sources said.
The three airlines are collectively projected to incur operating losses of Rs 5,000 crore (Rs 50 billion), industry estimates suggest.
Oil companies have indicated that they will explore various options, including taking legal recourse.