Tough time: Kingfisher's ticketing counter in Mumbai
INDIA’S Kingfisher Airlines’ posted its worst-ever quarterly loss on Thursday (May 31), as huge cuts in the number of flights compounded the woes of a cash-strapped carrier facing high fuel prices and intense competition for low fares, sending its shares down to record lows.
Kingfisher, which was India’s No. 2 airline until a year ago, has been the biggest victim of turbulence in India’s aviation industry, where six main carriers face a total debt load of $20bn (£12.89bn) and $2bn (£1.28bn) in annual losses.
It is now the smallest carrier in India by market share. Shares in the airline have plummeted more than 80 per cent since the beginning of 2011, shrinking the airline’s market value to just under $100m (£64.49m).
The carrier blamed losses on high fuel prices, a weak rupee and an “unprecedented, tough operating environment,” but said it would return to normal services within 12 months.
“The company has a focused fleet re-induction plan and hopes to be back to full-scale operations in the next 12 months, backed by a recapitalisation plan that the company is actively pursuing and confident of achieving,” it said in a statement.
Kingfisher needs at least $500m (£322.50m) immediately to keep flying, according to the Centre for Asia Pacific Aviation, but there has been no sign of funding in the near term.
If Kingfisher fails to turn the airline around, its banks - which have $1.3bn (£83.84m) in loans outstanding - would be left to pick over the carcass in a country that does not have a formal bankruptcy process.
Loans are secured in part by a combination of guarantees by the airline’s parent, the UB group, as well as Kingfisher shares, Mallya’s personal guarantees, its Mumbai real estate assets and the Kingfisher brand itself, bankers had said.
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