Vijay Mallya-led Kingfisher Airlines reported a 75 percent wider net loss for the December quarter (Q3) from a year earlier,as the ailing Indian carrier was squeezed by high fuel costs,a weaker rupee and fierce competition.
Debt-laden Kingfisher,controlled by liquor baron Vijay Mallya,is around a quarter-owned by banks and its top lender State Bank of India has refused to add to loans it considers non-performing.
Steep depreciation of the Indian rupee coupled with consistently high crude oil prices has led to a challenging quarter for the Indian aviation industry,Kingfisher said in a statement on Thursday.
The company is in talks with distressed-debt experts but there are no signs of a guardian angel equity injection that executives have long promised. An entry into the potentially lucrative Oneworld Alliance was postponed this month as it scrambles for capital.
Unpaid staff have left in droves,and scores of flights have been cancelled to cut costs. Turboprop maker ATR,a joint venture of EADS and Finmeccanica,cancelled 38 plane orders from Kingfisher in January because the airline hadn’t paid for the planes.
Kingfisher lost 4.44 billion rupees ($90.1 million) in the fiscal third quarter,74.8 percent more than a loss of 2.54 billion rupees a year previously. Revenue fell 15.2 percent to 13.42 billion rupees.
Right now this is just minor fire-fighting,at some point they will need to consider a wholesale scale-back,such as a possible dumping of the international services,an airline sector analyst at a Mumbai brokerage told Reuters.
Kingfisher Group’s chief financial officer,Ravi Nedungadi,declined to comment on the results when contacted by Reuters.
Kingfisher,named after India’s most famous beer owned by its parent company,has grounded planes for safety shortcomings and faced immense investor scrutiny on its plans to revive the airline.
India’s airlines are likely to lose up to $3 billion in the fiscal year ending March as the industry’s total debt swells to $20 billion. State-owned Air India is operating on taxpayer life support.
Fierce competition has driven down prices and margins as costs stack up. Domestic demand grew 12 percent in the quarter,but capacity addition stood at 17 percent over a year earlier,Kingfisher said.
Kingfisher suffered an additional fuel cost of 1.9 billion rupees ($38.6 million) during the quarter as compared with 12 months previous,the company said.
Compounding the impact of rising crude prices,taxes levied by state-run oil marketing companies make jet fuel prices in India among the highest in the world,and account for around half the carrier’s operating costs.
A government panel this month approved a plan to allow carriers to import jet fuel directly,a break that could help them cut fuel costs by up to 20 percent but also require new spending.
India’s government is expected to soon allow foreign carriers to take a 49 percent stake in local airlines,a move Kingfisher has long called for,which may prove to be the saviour of the troubled industry.
Two major Gulf carriers told Reuters this month that they have no interest in taking a stake in Kingfisher. Kingfisher has also opened talks with SC Lowy Financial,a Hong Kong distressed debt firm,in a sign it may be running out of traditional funding options.
Shares in Kingfisher,which has never made a profit,have dropped almost 60 percent since the beginning of last year,shrinking the airline’s market value to around $270 million.
($1 = 49.29 rupees)
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