Kingfisher Airlines grounds 15 planes

Even as SBI lays out plans to help,airline grounds 15 planes after prolonged cash crunch.

Beleaguered Kingfisher Airlines has grounded 15 planes in its fleet as it battles a prolonged cash crunch,said a company executive,as banks continue efforts to prop up the airline,which until recently was India’s second-largest.

A Kingfisher executive,who declined to be identified,told Reuters that the airline had grounded 15 of its planes but did not say how long they had been grounded or why. This executive spoke after certain media reports mentioned that the airline had grounded some of its Airbus planes as it could not meet their maintenance and overhaul expenses.

Kingfisher,controlled by liquor tycoon Vijay Mallya,has been seeking additional working capital from its lenders. The chairman of State Bank of India,which heads the consortium of Kingfisher’s lenders,on Monday said banks are trying to help.

We are trying to help Kingfisher,said State Bank of India Chairman Pratip Choudhuri on Monday morning.

Asked if banks were open to lending more funds to the cash-starved airline,he said,everything is on the table.

Meanwhile,reports over the weekend said that Sahara planned to aid Kingfisher by lending more than Rs 2.5 billion. A Sahara source who declined to be identified,said that the group was planning to lend to the carrier at least that amount but did not give further details.

A Sahara spokesman declined to comment.

Kingfisher shares rose more than 2 per cent and into positive territory after the SBI chairman’s comments. They were up 0.69 per cent at 21.85 rupees in a weak Mumbai market as of late morning. Its share price has fallen 67 per cent since the start of the year,cutting its market value to about $202 million.

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All but one of India’s six main airlines are making losses,as carriers engage in aggressive price competition even as they are squeezed by the high cost of jet fuel and other expenses.

Besides this,the country’s aviation regulator is conducting a financial review of Kingfisher.

Giving an explanation for the grounded aircraft,sources in Mumbai told Reuters that Kingfisher had grounded two aircraft there in recent weeks due to a lack of spare parts,but there were no new flight cancellations.

Kingfisher,which has never made a profit,has seen its market share shrink to third-place after it slashed flights beginning last month. Over 100 of its pilots have quit recently and suppliers,including airports and oil companies,have stopped extending credit to the airline.