An ailing Indian airline is considering using letters of credit (L/Cs) to help bail it out of financial difficulties.

Heavily indebted Kingfisher Airlines is also appealing to banks, the government and potential new partners for help.

L/C benefits

Kingfisher wants to reduce its interest burden. One of the ways it is suggesting doing this is by asking the lessors of its aircraft to return Kingfisher's cash deposits and allow the airline to open standby L/Cs in the lessors' favour instead.

This could help Kingfisher reduce its debts by around US$20 million and relieve the airline from the 14% interest it currently pays on this debt.

Problem solving

In other measures to solve its financial problems, Kingfisher has sought government permission to import fuel directly.

It is also withdrawing from loss-making routes and ending its budget airline Kingfisher Red operations.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.