KINGFISHER STARES AT OPERATIONAL SHUTDOWN: CAPA
New Delhi,India : The beleaguered Kingfisher Airlines may be staring at an operational shutdown within the next 30-60 days if it is unable to infuse $600 million immediately, Centre for Asia Pacific Aviation (CAPA), an aviation industry consultant said.
“Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and reorganise. A viable turnaround is unrealistic without a significant recapitalisation of the airline.” CAPA said in its report on the industry’s performance in the first quarter of the current fiscal.
“Kingfisher is able to continue as a result of daily infusions of funding by the promoter; however with mounting losses the situation is unsustainable. In Q1, the promoters invested $133.9 million, but this barely allows the airline to survive,” the report said.
The report estimated the airline to make a total loss of $220-$260 million in 2012-13. The company’s net loss narrowed to Rs650.78 crore for the quarter ended June 30, 2012, as against Rs1,151 crore a year ago.“The uncertainty regarding the scale of Kingfisher’s operations means that any outlook for the carrier’s financial is very difficult to estimate, and its full year loss could be higher than expected,” the report said.
According to CAPA, restructuring of the airline will require the banks to take a significant hit as they have a huge exposure to the carrier.The airline that faces frequent labour unrest with one group of the other of employees going on flash strike demanding payment of their salaries and other reimbursements reported the lowest market share in July at 3.4%.
CAPA further predicted a reduction in Air India’s losses for 2012-13, which, it said, would be around $1 billion than an earlier estimated loss of $1.3 billion, as the airline has improved its domestic operations.AI’s domestic revenue increased 46% year on year as the airline achieved the third highest domestic market share in August at 18.2%.
26/08/2012 : Daily News and Analysis.
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