India’s debt-ridden Kingfisher Airlines is rejecting speculation that it soon will shut down and instead is taking steps it hopes will enable the carrier to turn a profit.
Chairman Vijay Mallya, after announcing a second-quarter net loss of 4.69 billion rupees ($94 million), tried to stem worries about the carrier’s future by saying all airlines in India are operating in a tough environment. “Other airlines were making losses too. To write the epitaph for Kingfisher Airlines constantly is neither fair nor accurate,” he said.
Kingfisher has not asked the government for a bailout, Mallya says, but rather wants lenders to inject working capital of about 8 billion rupees ($158 million) as short-term relief.
“Our demands with the banks are mainly two-fold: One is to meet short-term capital needs, which have gone up, and concession on interest [rates],” Mallya said. The airline restructured its debt earlier this year by converting about a third of its loans into shares and issuing them to lenders and founder companies. In September, the airline closed its low-cost operation, Kingfisher Red.
Mallya, chief of the United Breweries Group, which runs Kingfisher, also called for the government to allow foreign airlines to buy stakes in Indian carriers.
“We need equity to improve ... [our] balance sheet, not just Kingfisher but the entire industry,” he said.
He said the company has cleared all debts owed to the two state-owned oil companies, Indian Oil and Bharat Petroleum, and has applied for permission to import fuel. If the carrier can import the fuel directly, it will not have to pay sales tax on the fuel.
Kingfisher has become one of the main casualties of high fuel costs and a fierce price war by a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future. Reuters reported earlier this week that Kingfisher has pushed off delivery of the fiveit has on order to an unspecified date at least five years in the future.
Mallya says Kingfisher Airlines has initiated a large-scale aircraft reconfiguration and transition to the full-service model. “This would enable a greater number of seats in the air within the current costs and increase the choice of flights for our premium guests.”
Other actions taken include network rationalization, steps to reduce interest costs and a streamlining of existing fleet orders.