Kingfisher Airlines Loss Now at 142 Million Dollars
Tuesday, 12th February 2013 at 03:05am
The embattled Kingfisher Airlines is accumulating more losses in the last quarter of last year, now amounting to 7.55 billion rupees, or $142 million.
Ending December 31, its three-month losses went up to 7.55 billion rupees or equivalent to $142 million. The remaining planes in its fleet are sitting idle since the government regulator suspended its license due to multiple problems it was facing affecting its creditors and employees.
The erstwhile India's second-largest airline showed signs of trouble early last year as its creditors demanded payment which the airline couldn't pay. As a result, some of its planes were prevented from flying as ordered by its lessors and many flights thereafter were canceled. In the ensuing months, the airline wasn't able to pay its employees months worth of their salaries.
It has owed an estimated $2.5 billion to all its creditor banks, aircraft lessors, airports, oil companies and its staff.
The airline has not been profitable since it started operations in 2005. Though it captured the second largest share in India's domestic market shortly after that, it had been operating in red. In the past months following the suspension, and the eventual expiry of its license to operate, the ailing airline has been reportedly in talks with its creditors and aviation authorities for a possible negotiations regarding its resurrection.
According to the Civil Aviation Minister of India, the carrier requires as little as $186 million to be able to operate again. The amount is a mere fraction of its total estimated debt.
In its recent quarterly report, B.K. Ramadhyani & Co. revealed that the airline was said to have not used the acceptable accounting standard usually practiced in India. The accounting method it employed when calculating costs incurred for aircraft maintenance was, therefore, flawed. B.K. Ramadhyani & Co. is the auditing firm for Kingfisher.
The auditing firm added that had it used the accounting standard generally acceptable in the industry, its loss would have been much higher than the reported 7.55 billion rupees. It could have hit 10.90 billion rupees or 3.4 billion more.
During the last quarter, while it remained suspended, Kingfisher spent a substantial amount or 5.83 billion rupees on debt servicing, including finance costs of 4.01 billion rupees. The rest of the amount went to its lessors.
On the first trading day this week, Kingfisher shares fell 2% ahead of the release of the report. Overall, its shares plunged by 56% in value over the previous year, making it one of the three worst-performing airline stocks in the world.
The airline was founded in 2003 by the liquor magnate Vijay Mallya and started operations only in 2005. It has not seen profit during its eight years in the business. Its total debt is pegged at 33.1 billion rupees as of 2012.
By: Pete Lee.