MUMBAI — Shares of India's cash-strapped Kingfisher Airlines slid on Friday after media reports said that its bankers had rejected a request to help tide the company over with a loan.
Kingfisher lost 4.53 percent at 16.12 rupees on the Bombay Stock Exchange.
The fall came after Kingfisher's shares had soared 105 percent in the past four weeks on mounting speculation that foreign airlines are looking to invest in local airlines, including Kingfisher.
Investor sentiment was soured by reports that a lending consortium had turned down Kingfisher chief Vijay Mallya's request for a two-billion rupee ($38 million) working loan for the carrier.
The consortium, headed by India's largest commercial bank, State Bank of India, has also asked for a revival plan for Kingfisher to be finalised in the next two-to-three weeks, the Press Trust of India new agency reported.
There was no immediate comment from the consortium on the reports.
Debt-laden Kingfisher, which has never made a profit since its launch in 2005, has seen its brand battered by frequent flight cancellations and staff strikes over non-payment of salaries.
Its market share had shrunk to 3.2 percent in August, the smallest of India's airlines.
Opening up India's airlines to foreign investment is seen as a boost for several domestic carriers, which are battling rising fuel prices and intense competition in a slowing economy.
Kingfisher is particularly in need of a capital infusion from a foreign carrier.
The Times of India newspaper on Friday reported Dubai's Emirates might be interested in investing in Kingfisher, adding that Mallya met senior Emirates' executives in Singapore while attending a sporting event.
Emirates has not publicly expressed interest in Kingfisher but has welcomed the Indian government's recent move to open up the airline sector to investment by foreign carriers.
"India is one of the world's most important aviation markets," the paper quoted Emirates as saying.
"While Emirates' philosophy is to focus on organic growth, we always welcome any reform which liberalises markets, including FDI rules," Emirates said.
Copyright © 2013 AFP. All rights reserved. More »
