Mumbai: Kingfisher Airlines, the Indian carrier that has cut flights amid a cash shortage, said it is in talks with several investors to raise funds after its first-quarter loss widened.

The carrier, which got Rs7.5 billion ($136 million) from parent UB Group for operations, “continues to believe it will get recapitalized and get on a path of sustained profitability,” it said in a statement dated August 10, without giving details. The net worth of Kingfisher, which has posted more than 19 straight quarterly losses, has eroded, it said.

Kingfisher has asked banks for more loans as its market share plummeted and it struggled to pay salaries and interest on debt accumulated for leasing planes. Jet Airways (India) Ltd., and SpiceJet Ltd., the nation’s two other listed carriers, returned to profit in the quarter as they benefited from Kingfisher’s capacity cuts.

“There’s no hope for Kingfisher,” said Jasdeep Walia, an analyst at Kotak Securities Ltd. in Mumbai. “Interest costs it was servicing with about 65 planes now have to be paid with cash from operating a quarter of that fleet. It’ll only lose more.”

Loss widens

The net loss was Rs6.5 billion ($117 million) in the three months ended June 30, compared with a loss of Rs2.6 billion a year earlier, the company said. Sales fell 84 per cent to Rs3 billion.

Kingfisher, controlled by billionaire Vijay Mallya, fell 11 per cent to Rs7.40, a record low, at the close of trading in Mumbai on August 10. The benchmark BSE India Sensitive Index was little changed. The stock has dropped 65 per cent this year, compared with the 14 per cent gain in the key index.

The carrier is operating 20 planes as it cut services to about 120 flights a day, compared with 66 aircraft and about 340 daily flights in March 2011. Kingfisher’s market share, once second-biggest among Indian carriers, dropped to 4.2 per cent as of June, compared with 27.4 per cent for Jet and 26 per cent at discount carrier IndiGo.

The company spent Rs3.8 billion on returning or idling aircraft after cutting flights, the carrier said. It’s negotiating with lessors for more time to pay rentals on some aircraft, the airline said.

Withholding fees

Kingfisher, following a directive from its lenders, withheld Rs280 million in fees to entities that arranged loan guarantees, according to the statement.

The carrier has ended international operations and delayed Airbus A380 deliveries beyond 2016 because of the losses. It was also shut out from International Air Transport Association’s billing systems after failing to pay required cash deposits.

Kingfisher is in talks with IATA for regaining access, Tony Tyler, director general of the group, said on July 25.

The airline pledged its brand, office furniture and other assets against Rs64.2 billion of debt. It has delayed salaries to employees and also failed to pay banks, airports, tax authorities and fuel suppliers.

Last month, the carrier canceled about 40 flights after some employees refused to work because they weren’t paid. The services were restored later. Kingfisher is also in talks with banks and lessors after they invoked Rs8.4 billion of financial guarantees its parent provided.

Rule change

Kingfisher has said that potential investments hinge on a change in India’s airline investment rules. The government is considering letting overseas carriers buy stakes of as much as 49 per cent in local operators. Mallya has been seeking investments since at least November.

Kingfisher may post a loss as high as Rs14 billion this fiscal year and the carrier needs about $1 billion of funds, CAPA Centre for Aviation, an industry consultant, said in May.

Kingfisher has a long-term debt to total capital ratio of 193 per cent, according to data compiled by Bloomberg. Jet Airways’ ratio is 58 per cent, while SpiceJet’s is at 93 per cent.

Industrywide losses by India’s airlines totaled more than $2 billion in the year ended in March, according to CAPA. That may narrow to as much as $1.4 billion in the current fiscal year, CAPA said.