Bengaluru: Kingfisher Airlines Ltd., struggling with a cash shortage, reported a wider first-quarter loss as passengers shunned the carrier because of flight cuts and service disruptions.
The net loss in the three months ended June 30 totalled Rs6.5 billion ($117 million), compared with a loss of Rs2.6 billion a year earlier, the Bangalore-based carrier said in an e-mailed statement yesterday. Sales fell 84 per cent to Rs3 billion.
The airline’s market share has slumped to sixth from second as it grounded planes and struggled to pay salaries and interest on debt accumulated to pay for planes. Jet Airways (India) and SpiceJet, 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 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.”
Kingfisher, controlled by billionaire Vijay Mallya, fell 11 per cent to Rs7.40, a record low, at the close of trading in Mumbai on Friday. The benchmark BSE India Sensitive Index was little changed. The stock has dropped 65 per cent this year after plunging 68 per cent in 2011.
The carrier is operating 20 planes as it reduced services to about 120 flights a day, compared with 66 aircraft and about 340 daily flights in March 2011. It had a market share of 4.2 per cent in 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, according to the statement. Negotiations are on with lessors to seek more time to pay rentals on some aircraft, it said.
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 SAS 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 July 25.
The airline pledged its brand, office furniture and other assets against Rs64.2 billion of debt. The company has delayed salaries to its 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 8.4 billion rupees of financial guarantees its parent provided.
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 at least since 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.