Home >companies >Kingfisher likely to cut more flights in summer

New Delhi: Cash-strapped Kingfisher Airlines Ltd may be looking at a second round of flight cuts starting April, indicating that finances are still not in order at the Vijay Mallya-controlled carrier.

“They are now planning to fly only 38-39 aircraft in the summer schedule," said a government official, who declined to be named. A second government official confirmed the move. Airlines file their respective plans with regulator Directorate General of Civil Aviation (DGCA) for the summer schedule, which starts after March, in the first half of January.

Ground situation: A government official says Kingfisher is planning to fly only 38-39 aircraft in the summer schedule. Harikrishna Katragadda/ Mint

“Bad news for KFA (Kingfisher Airlines) augurs well for other airlines," said Vijay Nara, an analyst at Mumbai-based brokerage Fortune Equity Brokers. “Flight cancellations of KFA means lower seats supply or industry capacity, giving other airlines better pricing and loads. Severe cash shortage has affected KFA’s operations and (it is) quite likely that we may see further disruptions as it struggles to pay for fuel, salaries, lease rentals, etc."

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Mint’s Tarun Shukla says Kingfisher Airlines is planning a second round of flight cancellations even as it is struggles to pay its creditors and vendors

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Kingfisher told the regulator it plans to use 38-39 aircraft. From the 270-80 daily flights it flies currently, a reduction in five aircraft could lead to a curtailment of about 30 daily flights, depending on the type of aircraft the airline plans to stop using.

An Airbus A320, which dominates the Kingfisher fleet, can make about six daily flights on average. For the winter schedule, which started in October, the average (domestic) number of flights a day that had been approved by the regulator for Kingfisher was 418, to be operated with 34 Airbus and 23 ATR aircraft, according to an internal DGCA note reviewed by Mint.

Since December, two Kingfisher planes have been taken back by the lessor, leaving it with 64 aircraft, many of which cannot fly because of a lack of spare parts, according to DGCA’s financial audit. A Kingfisher Airlines spokesman declined to comment.

Kingfisher has defaulted on payments to oil companies, airport operators and more recently on employee salaries. It needs Rs3,000-4,000 crore to help tide over the financial crunch.

A Kingfisher executive, who declined to be named, said several aircraft were grounded and there was no certainty about when they would fly again. This would require a fund infusion as engines and spare parts are expensive, the executive said.

Besides, the airline has not paid salaries to a majority of its employees for two months in a row. “There is no word on it," this executive said, referring to salaries.

As a result of the curtailment of flights, Kingfisher has slipped to fifth position in terms of the number of domestic passengers carried.

Kingfisher now has a 14% share ahead of GoAir’s 6.2%. Naresh Goyal’s Jet group remains the biggest airline in India with Jet Airways and JetLite together having a 27.1% share in November. Rahul Bhatia’s IndiGo is second with 19.8%, followed by Air India at 17.4%.

tarun.s@livemint.com

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