SHARES in India’s Kingfisher Airlines plunged today as company executives met with regulators over mass flight cancellations caused by tax officials freezing the cash-strapped carrier’s bank accounts.
Shares in the airline fell nearly 20 per cent ahead of the meeting in New Delhi with the Directorate General of Civil Aviation (DGCA), as investors exited the stock fearing for the carrier`s future.
Kingfisher chief executive Sanjay Agarwal was summoned to explain when the Bangalore-based airline would restart a full flight schedule and to outline plans to help affected passengers.
The loss-making carrier – which is battling to pay creditors and staff – is beset by difficulties caused by soaring fuel costs and high local sales taxes, as well as an intense domestic price war.
Kingfisher, owned by brewing magnate Vijay Mallya, has never posted a net profit since it started operating in 2005.
Mallya told the Times Now television channel yesterday that he was determined his carrier would survive.
“Closing down is not an option. It will not happen. Government does not want it to happen. It is not in national interest,” Mallya said. “We have asked banks to consider our proposal to provide more working capital.”
Almost 40 Kingfisher flights were cancelled yesterday, including international flights to Bangkok, Singapore, Kathmandu and Dhaka, and another 30 flights were scrapped today morning.
Mallya blamed the cancellations, which have affected thousands of passengers across India, on the sudden freezing of Kingfisher’s bank accounts by the tax department.
“I don’t deny we have taxes due… The bottom line is we requested for time to pay these dues,” he said.
India’s airline industry – once a symbol of the country’s economic progress – is now plagued by high fuel costs, price wars and inadequate airport infrastructure.
A quarter of Kingfisher is owned by local banks and some have refused to lend the company more cash unless fresh capital is raised.
The government has ruled out any bailout package for the airline.
