When Vijay Mallya, the king of good times, launched a high-profile airline in 2005, his primary motive was to use the platform to promote his best-selling Kingfisher beer.
“I can’t advertise my brand. I have to live my brand,” he said then.
Owning an airline was probably far more glamorous than being a liquor baron, particularly in India, where drinking still is a taboo.
On top of that, a premium airline in one of the fastest growing economies with business travel growing at an even faster speed would ensure additional revenue and add another feather to Mallya’s cap.
It was a perfect plan. It indeed was moving swiftly as Kingfisher soon occupied over a fifth of India’s traffic and Mallya’s kingdom expanded.
But not all good things stay forever.
After his airline nosedived, he is now said to be mulling selling a stake in his alcohol business to pocket some much-need cash for his ailing carrier.
This is irony at its best. And sad for business in general.
The airline he wished would become his way of promoting his alcohol brands, has now forced Mallya to potentially lose control of his prized company.
He tried everything else he could to save the airline, to arrange for half a billion dollars at least to pay its creditors, airports, lessors and tax authorities.
Mallya, a lawmaker himself, lobbied hard to convince the government to allow foreign carriers to invest in local airlines, but that could still take some time to materialise.
His promises of coming up with investors and a recovery plan are now taken with a pinch of salt, and industry watchers agree nothing short of a miracle can save Kingfisher Airline from an imminent demise.
In a slowing economy, raising funds is a tough job, even for healthy companies.
Mallya’s clout with top politicians in New Delhi surely has helped him delay the inevitable till now, but with no investor in sight and a debt burden of US$1.3 billion, selling his alcohol assets could be his last and arguably the best bet.
There is business logic in that too.
Kingfisher’s loans are secured in part by a combination of guarantees by the UB group, as well as Kingfisher shares, Mallya’s personal guarantees, Mumbai real estate assets and the Kingfisher brand itself.
If Kingfisher fails, all UB Group companies will be in trouble too. Debtors will go after the alcohol giant to recover their money, further diminishing Mallya’s sheen.
Somehow saving the airline, if need be by selling his alcohol assets, can still save some pride for Mallya.
This will be a hard decision for the man, but it will at least answer skeptics who fail to understand how Mallya, who owns one of the costliest yachts in the world, apart from cricket, soccer and Forumla One teams, does not have the money to pay Kingfisher’s pilots or crew.