Kingfisher’s third quarter loss at Rs.755 crore

Mumbai/Bangalore  : Debt-ridden Kingfisher Airlines Tuesday reported a net loss of Rs.755 crore for the third quarter of the current fiscal.

The airline had to suspend its operations due to labour issues and suspension of the passenger carrier’s flying licence in October 2012.

The airlines auditors – B.K. Ramadhyani & Co. – said the loss would have been Rs.1,090 crore if the airline had used the prevailing accounting standards in India.

The auditors said the accounting method applied by Kingfisher to calculate costs incurred upon maintenance and repairs of aircraft which were not used during the quarter under review is not in accordance with generally accepted accounting standards prevalent in India.

According to a regulatory filing at the Bombay Stock Exchange (BSE), the airline said it has incurred Rs.401 crore on finance costs and Rs.182 crore on aircraft leasing charges during the quarter under review.

The company’s scrip at the BSE fell 0.13 points – or 1.04 percent – at Rs.12.41 per share from its previous close of Rs.12.54.

The airline currently has an estimated financial debt of about Rs.8,000 crore, which it owes to a consortium of banks, aircraft leasing companies, airport operators, oil marketing companies and other vendors.

It has also failed to clear its employees’ dues of several months.

The airline said in the filing that it has made significant progress towards complying with regulatory requirements for it to restart its operations and reinstate its flying licence.

Kingfisher’s flying licence was suspended Oct 20, 2012, following a strike by employees that crippled the carrier’s operations. The licence officially expired Dec 31, 2012, while a revival plan the airline submitted to the Directorate General of Civil Aviation (DGCA) was rejected due to the lack of more “credible restart” details in the plan.

The airline, promoted by Vijaya Mallya, has two years to renew the licence to fly.

Kingfisher Airlines’ chairman Mallya wrote to employees Jan 10 intimating them of a two-step plan submitted to the aviation regulator to re-start the cash-strapped passenger carrier.

“We have submitted a detailed restart plan to DGCA in two parts. The first part deals with a limited re-start utilising seven aircraft ramping up to 21 aircraft in four months,” Mallya wrote in his letter.

According to Mallya, the second part of the plan envisages a full scale rehabilitation of the airline by increasing the fleet size to 57 aircraft within 12 months of recapitalisation.

“Both plans contain detailed information on key assumptions and funding requirements, including payment of outstanding salaries to employees,” he said.

Mallya added that the limited re-start plan is being targetted for the beginning of 2013 summer schedule and requires a funding of about Rs.650 crore, which will be provided by the United Breweries Group and associates.
File Photo  : AFP