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Money Jun 27, 2012

Kingfisher plunges 13% to Rs 11 as lessors take back 32 planes ?

With cash-starved private carrier Kingfisher Airlines defaulting on lease rentals of around Rs 1,000 crore, the lessors have taken back 34 aircraft, sources said on Tuesday even as the company maintained that it has returned the aircraft voluntarily.Besides, another 15 aircraft of the company are also aground due to want of spares, and the airline is now left with only 15 planes to carry out its operations.

Reacting to the news, the Kingfisher stock plunged 13.3 percent to trade at Rs 11.64 on the Bombay Stock Exchange. The share touched its 52-week high Rs 41.30 and 52-week low Rs 10.05 on 4 July, 2011 and 1 June, 2012, respectively. Currently, it is trading -68.47 percent below its 52-week high. The airline's shares have plummeted more than 80 percent since the beginning of 2011, shrinking the airline's market value to just under $100 million.

"Lessors have taken back as many as 34 aircraft from Kingfisher between March and June, owing to non-payment of lease rentals, which stand at around Rs 1,000 crore," sources said. The airline, however, said it has returned these aircraft voluntarily and that no aircraft was taken back by lessors by "force".

Reuters

"There have been no forced return of the aircraft to the lessors. Whenever we have returned planes, we have voluntarily done so," a Kingfisher spokesperson said in a text message.

It has also grounded another 15 planes as they require spares but due to paucity of funds it has not been able to replace them, sources said. "The airline currently has just 15 aircraft worth flying and a majority of them are ATRs," they said.

According to the sources, the 15 aircraft in service include eight ATRs, one A319, four A320s and two A321s. The airline today operates only around 100 odd flights with these aircraft, and has withdrawn from international operations. According to data released by the Directorate General of Civil Aviation, Kingfisher Airlines' market share dipped to 5.2% in May from 5.4% in April.

Adding to its woes, around 80 engineers have already quit the airline in the past four months due to non-payment of salaries by the near-bankrupt carrier. Last week fifteen pilots of the cash-strapped airline stopped flying on Thursday to protest the delay in their salaries

The liquor baron Vijay Malaya-promoted airline, which is sitting on a debt pile of over Rs 7,500 crore, had reported a loss of Rs 1151.5 crore for the quarter ending March. While it's operating costs increased, passenger numbers and revenue declined, as the airline cut flights and withdrew its international schedule

The cash-strapped airline, which has not reported profit since launch, has not been able pay salaries since February nor it has managed to pay its dues to oil companies and airports.

The carrier has been defaulting on tax payments and bills to its vendors. It has been seeking fresh bank funds since December, and also tried to raise overseas funds unsuccessfully.

Bankers want the promoters, including chairman Vijay Mallya, to bring in at least Rs 2,000 crore in fresh capital before they consider the carrier's demand for fresh funds.

Kingfisher has pledged assets that include its brand and office furniture for Rs 6,400 crore bank loans, according to the Finance Ministry. A luxury villa in Goa, two helicopters, a building in Mumbai and shares have been used as collateral for loans as of November 2011.

The lenders to the airline had earlier ruled out any more money to Kingfisher, saying the airline had no room for further borrowing to run operations. While the lenders had explored the option of another round of debt restructuring, it can only happen if all of them declare this a non performing asset which is not the case at present.

Agencies

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