Mumbai: High jet fuel costs and grounded planes led to cash-strapped Kingfisher Airlines Ltd’s net loss widening two-and-a-half times to Rs 650.78 crore for the quarter ended 30 June 2012 against a Rs 263.53 crore net loss in the corresponding quarter a year ago.
Curtailed network operations led to an 84.19% decrease in total sales at Rs 301.38 crore for the reporting quarter against Rs 1,907.01 crore for the corresponding quarter a year ago.
A media statement said the impact of high fuel costs, high interest rates, the depreciation of Indian rupee, and extraordinary expenses on account of the return of aircraft to lessors and costs associated with non-operating aircraft resulted in losses.
“Kingfisher continues to believe it will get recapitalized and get on a path of sustained profitability. The airline is in discussions with several strategic and financial investors to bring fresh capital,” the media statement without disclosing names of the potential investors.
Parent company UB Group provided cash support of over Rs 750 crore to the airline to meet its cash flow requirements, the statement said.
For the April-June quarter, the airline incurred redelivery (of airplanes) costs of Rs 167.34 crore against Rs 4.67 crore a year ago. It also incurred restructuring and idle cost of Rs 208.69 crore for the June quarter; there was never such cost in the year-ago quarter.
Restructuring and idle costs represent a fixed cost associated with curtailment of operations during the period relating to aircraft on the ground.
The airline, however, did not disclose exact number of planes it is operating currently.
Sharan Lillaney, an analyst at domestic brokerage firm Angel Broking Ltd, said the losses has mainly come from fixed costs even in the context of non-operating regime.
“Kingfisher Airlines has employee costs, parking charges and other non-operating expenses. It is hard to make a profit at the operating level for Kingfisher Airlines,’’ said Lillaney, adding that Kingfisher will have to go for a complete restructuring to stay afloat in the current market conditions.
“In Q1 FY13, Kingfisher Airlines halved its operating losses to Rs 204 crore from Rs 429 crore in Q1 FY12. This was achieved by reducing the level of operations in this high cost environment through a 20-aircraft holding operation,” Kingfisher said in the media statement.
Kingfisher had introduced a temporary “holding plan” wherein it will fly only a little over 100 flights a day instead of the 350-plus flights it did a year ago.
The Kingfisher Airlines on Friday closed at an all-time low of Rs 7.40 on the BSE, down 11.06% from previous close, while the 30-share Sensex closed nearly flat at 17,557.74 points. The Kingfisher stock has lost 97.66% in value since it peaked at Rs 316.60 on 18 December 2007. The carrier has not made a profit since its inception.
The first quarter is a reasonably good season for domestic airlines. Significantly, airlines are heading into second quarter that is lean season adding further pressure on margins.
Kingfisher’s downsizing has helped rival carriers.
Jet Airways (India) Ltd, the country’s largest airline by passengers carried, posted a Rs 24.7 crore profit in the quarter ended 30 June against a loss of Rs 23.16 crore in the year earlier, performing better than expected as Kingfisher Airlines cut flights and fares rose, helping Jet end a run of five loss-making quarters.
India’s second largest low-fare carrier SpiceJet Ltd posted a profit of Rs 56.15 crore for the June quarter, compared with a loss of Rs 71.96 crore a year earlier, riding largely on other income from the sale and lease-back of its planes.
Meanwhile, Kingfisher Airlines has cancelled nearly 30 flights a day starting Wednesday from Delhi and Mumbai after a section of its employees, including engineers and pilots, reported sick, protesting a delay in payment of salaries. The airline has not paid salaries to its staff since February. The airline has total liabilities, including short and long term, of Rs 1,4162.42 crore as of 31 March.
To add to it woes, the income-tax (I-T) department had directed online travel agencies to remit cash generated out of ticket sales of Vijay Mallya-controlled Kingfisher Airlines to the government to recover its dues from the carrier. This will further affect the cash flow of Kingfisher Airlines, which has been downsizing operations.
In May, minister of state for finance S.S. Palanimanickam told the Lok Sabha that Kingfisher Airlines owed Rs 269.06 crore to the I-T department, and the government had initiated penalty and prosecution proceedings against the private carrier. Kingfisher Airlines owes money to various vendors including airports, aircraft lessors, caterers and oil marketing companies.