Proceeds from the United Spirits-Diageo deal will be used to slash Kingfisher Airlines' (KFA's) huge debt, the UB group has confirmed.

Vijay Mallya-led Kingfisher is burdened with a bet mountain of Rs 7,500 crore, and its losses widened to Rs 755.17 crore in the December quarter, from Rs 444.26 crore in the corresponding period of the previous year.

A spokesperson for the UB group said, "The group is in discussions with banks on ways to bring down their exposure, interalia, from the proceeds of the Diageo transaction."

Speaking on the topic, the spokesperson also said that lenders would work with the UB group in finding an orderly way to dispose some of the pledged shares to Diageo, if suitable. The spokesperson also claimed that United Spirits-Diageo deal had the support of the lenders.

The group's decision to used the proceeds from the United Spirits-Diageo deal to cut Kingfisher Airlines' debt came as the consortium of lenders to the carrier have started building up pressure on the struggling carrier.

Previously, Vijay Mallya had said that he would not sell the United Spirits to fund the debt-laden airline, and that the airline would find its own way to return to operations.

Kingfisher Airlines, which grounded its entire fleet of planes in last October, has not paid even salaries to its employees around the mid of last year. Most banks have classified the loan they extended to the airline as non performing asset or bad loans.