Kingfisher cuts flights to fend off debt, banks plan lifeline

Kingfisher Airlines, battling for survival, Wednesday submitted a new flight schedule to the industry regulator amidst buzz that the carrier has got a lifeline from a consortium of banks.

The airline, however, cancelled 30 flights for the fifth consecutive day as it told the Directorate General of Civil Aviation (DGCA) that with 28 aircraft it would operate around 170-180 daily after the regulator’s nod.

Sources in the DGCA said the regulator has received the new schedule and was studying it. The airline was directed by the DGCA Tuesday to submit a revised and realistic flight schedule within 24 hours.

DGCA chief E.K. Bharat Bhushan also briefed Civil Aviation Minister Ajit Singh Wednesday about his discussion with the airline’s management Tuesday.

The regulator is probing the large-scale cancellations and whether financial constraints have in anyway compromised passenger safety.

As word spread during the day that the ailing airline has managed funding from a consortium of banks, Ajit Singh said, “We hope Kingfisher can moblise its resources…It’s good if banks give loans to the airline.”

Ruling out a government bailout for a private company, Singh said: “But banks are going to take their own decision.”

Sources said the consortium of lenders led by the State Bank of India (SBI) was considering a relief package worth Rs.1,650 crore for the airline, crippled by a massive cash crunch, exodus of pilots and cabin crew, and grounded aircraft.

Kingfisher has a debt of Rs.7,057.08 crore. The company’s net loss widened to Rs.444.26 crore for the quarter ended December 31, 2011, from Rs.253.69 crore in the October-December quarter in the last fiscal.

Sources said the consortium, including IDBI bank, Bank of Baroda and Punjab National Bank, was studying a debt-restructuring plan put forwardlast week by SBI Caps, the investment banking arm of the lender.

The SBI management, however, declined to comment on the issue, citing client confidentiality.

The relief package news was not welcomed by the equities market as fresh loans would only add to the bank’s non-performing asset (NPA).

The SBI scrip closed the day at Rs.2,257.80 at the Bombay Stock Exchange (BSE), down 7.91 percent from Tuesday’s close of Rs.2,451.75. It had fallen over 8.55 percent in intra-day trade to a low of Rs.2,242.

The Kingfisher scrip also closed the day’s trade 6.53 percent down at Rs.25.05 from Tuesday’s close of Rs.26.80.