| Kingfisher losses double to Rs6.5b |
NEW DELHI Kingfisher Airlines, which used to be India’s second biggest carrier but is now struggling with crushing debt, posted another quarterly loss on Saturday and shed no light on any potential funding lifeline.
Kingfisher, controlled by Vijay Mallya, is the biggest victim of turbulence in the Indian aviation industry, which has struggled under high state taxes on jet fuel, high airport charges, below-cost fares and an uncertain regulatory environment.
Kingfisher, which has never made a profit since its founding in 2005, lost Rs6.51 billion in April-June, compared with a loss of Rs2.64 billion a year earlier.
Revenues fell by a fifth to Rs3.01 billion for the April to June period. The airline owes millions of dollars in taxes as well as money to suppliers, lenders, partners and staff.
Kingfisher’s shares have steadily lost ground and hit a record low of Rs7.27 on Friday ahead of its earnings results as investors bailed out fearing a large loss.
The fortunes of Kingfisher, saddled with $1.4 billion in debt, hang on its ability to raise funds soon. It needs at least $500 million immediately to keep operating, according to the Centre for Asia Pacific Aviation consultancy.
The carrier has scaled down its operations dramatically in recent months — halting international operations completely — in a bid to curb costs and now has the smallest market share among Indian airlines at just 4.2 per cent.
The airline was forced to cancel over 30 flights on Wednesday after pilots and engineers refused to show up for work because of unpaid wages.
It has long hoped that a government proposal to let foreign carriers take a maximum 49 per cent stake in domestic airlines will be made law, providing it a potential lifeline. That proposal is stalled by complicated coalition government politics and there is no clarity on whether or when it will be implemented.
No foreign airline has publicly shown any interest in picking up a stake in Kingfisher. State-taxes of up to 30 per cent make jet fuel about 50 per cent costlier in India than the global average. Fuel constitutes about half of an airline’s total costs.
To add to those woes, Mallya has failed to pay Kingfisher’s pilots or crew for months and has regularly faced employee ire over salaries, leading to cancellations of flights. Mallya on Thursday told his employees they were free to quit if they believed the actions they were taking to protest against the non-payment of salary were correct.
Reuters
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