Kingfisher Airlines Operating on a on Holding Pattern Basis

Tuesday, 11th September 2012 at 03:51am

ingfisher Airlines is currently operating on a "holding pattern" basis, according to its Chairman, Vijay Mallya.

The Chairman was speaking in behalf of the board based on the airline's 2011-2012 Report of Directors. The airline company releases Report of the Directors to its shareholders every year containing the company's current state of operation including its financial strength or the lack of it.

This year, the report was released ahead of the General Assembly Meeting which is scheduled to be held in Bangalore on September 26, 2012.

The term "holding pattern" is used in the aviation industry to mean a condition where a plane is making a number of mid-air turns to delay landing or avoid possible collision with other aircraft.

The airline official is alluding to the current financial condition of the Kingfisher Airlines. The carrier's net loss ballooned to Rs 2,328 crore during the fiscal year 2011-12 or more than 100 percent from the previous fiscal year at Rs 1,027 crore.

As of March 31, 2012, its long-term borrowings were down to Rs 5,695 crore from Rs 6,306 crore over the previous year. Its short-term borrowings, on the other hand, skyrocketed from Rs 604 crore from the previous fiscal year to Rs 2,335 during the fiscal year 2011-12.

In November 2011, the airline decided to streamlined its operation to cushion the impact of its financial problem which was compounded by the ever-increasing jet fuel prices, rising interest rate, rupee devaluation and the decreasing pattern on yields.

The airline, however, continues to suffer losses despite the downsizing of its operation resulting to the cessation of services from Billing and Settlement Plan of International Air Transport Association (IATA). He added, though, that the airline has an option to sell some of its assets to cover its losses.

The streamlined operation caused the temporary suspension of its international operations to abate huge financial losses.

Mr. Mallya was lamenting about the high operational cost of airlines in the country which makes it real hard for airline companies to make a decent profit. Aside from the exorbitant airport and handling fees, prohibitively high jet fuel prices as well high interest rates from lending institutions and, to a more extent, rupee devaluation, compounded the problem.

Sighs of relief from airline companies may soon replace the agonizing moans as the government is currently working on instituting reforms in the country's aviation industry to make it attractive to airline operators and prospective investors.

The airline official also disclosed that the government is working on the amendment to the Foreign Direct Investment (FDI) policy with the hope of attracting foreign airline operators to invest in local carriers.

By: Pete Lee.