Agencies/Mumbai


Customers stand at a Kingfisher Airlines reservation office at the domestic airport in Mumbai yesterday. Kingfisher Airlines’ losses mounted in the third quarter, taking the total loss to $240mn this fiscal year
The debt-laden Kingfisher Airlines reported yesterday an almost doubling of net losses in the last quarter of 2011, plunging it further into a financial crisis that threatens its survival.
The company posted a net loss of Rs4.44bn ($88mn) in the three months to December, compared with Rs2.54bn a year earlier.
Sales fell about 25% to Rs13.42bn from Rs17.90bn, while interest charges on its huge debt pile rose to Rs3.5bn from Rs3.4bn a year earlier.
The company had been due to release figures for its fiscal third-quarter on Tuesday, but it was unable to because of “hardware problems” with its accounting system, it said.
The Bangalore-based carrier has seen its passenger market share slump in recent months to 12.1%.
It is battling a cash-flow crisis that it says has been caused by soaring fuel costs and high local sales taxes as well as a domestic price war.
Kingfisher, owned by brewing magnate Vijay Mallya, has never posted a net profit since it started operating in 2005.
“The company has incurred substantial losses and its networth has been eroded,” Mallya said in a company statement issued yesterday.
The airline called the quarter “challenging” due to the steep depreciation of the rupee coupled with high crude oil prices.
Its aircraft fuel costs rose 37% year-on-year, to Rs7.39bn in the quarter.
The carrier’s shares closed up 0.75% at 26.95, retracing from an intraday high of Rs28 after earnings came in, signalling that investors had feared sharper losses.
Concerns over Kingfisher’s financial viability heightened after it axed the low-cost Kingfisher Red service to concentrate on its full-fare business in September.
Kingfisher has been one of India’s worst-hit airlines in an industry - once a symbol of India’s economic progress - which is now plagued by high jet fuel prices, fierce competition, price wars and inadequate airport infrastructure.
Just one of India’s main carriers is thought to make money, the privately owned budget airline IndiGo.
Indian airlines, the growth of which has been one of the most visible signs of the country’s economic expansion, are struggling to cope with soaring fuel prices, intense competition and heavy debt.
A quarter of Kingfisher is owned by local banks and some have refused to lend more cash to the firm unless fresh capital is raised.
Mallya in November said unnamed investors had shown an interest in putting money into the airline, but a deal is yet to be finalised.
“Nothing will start improving for Kingfisher until they manage to raise fresh capital,” said Sharan Lillaney, analyst at Mumbai-based Angel Broking.
A government panel last month approved a plan to allow airlines to directly import jet fuel, which could ease fuel costs for local carriers.
The aviation ministry is also considering plans to allow foreign airlines to buy up to 49% in local carriers.
Foreign airlines are currently banned from owning stakes in Indian carriers although non-airline investors from abroad can hold as much as 49%.
l State-owned oil marketing companies yesterday cut aviation fuel prices by Rs350.70 or 0.56% a kilolitre (kl).
With this, the price of air turbine fuel (ATF) at Delhi’s Indira Gandhi International Airport will come down from Rs62,907.82 a kl to Rs62,557.12.
Just a fortnight ago, Indian Oil, Bharat Petroleum and Hindustan Petroleum had raised the price by Rs1,974.29 per kl or 3.04%.
The latest cut is expected to reduce the burden on the aviation industry, where many airlines are incurring losses due to the high cost of jet fuel.
“Any reduction in ATF prices is a welcome step. But there is still a long way to go in rationalising our domestic ATF prices which are nearly 50-60% higher than in our competing markets like the Middle East and Southeast Asia,” Amber Dubey, director, aviation, at consultancy firm KPMG said.
The ATF price accounts for nearly 50% of the operating cost of an airline. Jet fuel prices also vary from state to state which levy sales tax on the ATF from 3 to 35%.