New Delhi, Nov 14 (Agencies): Shares in cash-strapped Kingfisher Airlines rose more than 7% on Monday after reports the cash-strapped Indian carrier would consider proposals, including selling property, to cut its $1.3 billion debt by more than half. Kingfisher's board, which is meeting on Monday to finalise its
 
quarterly results, will also consider converting loans from its parent company into equity and changing the terms under which it leases aircraft.
The board is likely to explore ways out of the financial crisis as the Central government remains non-committal on the issue of allowing direct investment by foreign airlines in the domestic aviation sector.

If approved, the proposals will help the company to get badly needed bank loans to run its operations.

Company officials were not immediately available for comment on the report.

Shares in Kingfisher, controlled by flamboyant liquor baron Vijay Mallya, climbed 7.6% in a firm Mumbai market , after plunging as much as 18% on Friday to their lowest since launch.

The carrier has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.

The Centre for Asia Pacific Aviation (CAPA) has forecast a record $2.5 billion to $3 billion loss for Indian airlines for the year ending March 2012, with state-run Air India alone likely to account for more than half of it.

The airline, which had cancelled about 200 flights in the past week, is likely to propose a preferential issue of shares to investors, to meet a key demand of banks that are insisting its billionaire-founder Mallya bring in more funds.

Six weeks ago Kingfisher announced plans to recast its business model by doing away with its low-cost service. On Friday, it said it was dropping unprofitable routes and speeding up a fleet reconfiguration, which would see its daily schedule of flights drop to 300 from 340.

Vijay Mallya may have to dip into his liquor empire to help out his doddering aviation dream. Cash-strapped Kingfisher Airlines (KFA) needs an immediate capital infusion of about $500 million (Rs 2,500 crore) to restore a semblance of normalcy in its day-to-day operations, but it would involve tangible monetary commitment of more than Rs 1,000 crore from group flagship United Breweries (UB) Holdings, which presides over the baron's family jewels.

Analysts said neither Mallya nor UB Holdings, which reported a net profit of Rs 40.29 crore in the year-ending March 2011, is cash-strapped. However, committing more than Rs 1,000 crore in funds could dent his expansion plans in the spirits business.

A Mumbai-based analyst who tracks consumer companies said UB Holdings is scouting to acquire marquee liquor brands in Europe for which it needs cash.

In August, the company's board approved a Rs 2,000-crore rights issue to raise finances to fund daily operations, but analysts wonder if UB Holdings will generate sufficient resources to invest in the issue so as to retain control over the company.

As of June, United Breweries (Holding), its subsidiaries Kingfisher Finvest India, United Overseas and Mallya held 58.61% of the airline.

A consortium of 13 lenders owned another 23.27% of Kingfisher shares following a debt recast this year.