Kingfisher Airlines submitted a downsized flight schedule plan on Wednesday to India’s aviation regulator, but the debt-laden Indian carrier is still struggling to secure fresh financing.
Bharat Bhushan, the director-general of civil aviation, said Kingfisher will operate 175 daily domestic flights with 28 aircraft, down from 240 trips with 64 planes. The chief regulator added that the 65 flights shed by Kingfisher would be redistributed among the other carriers.
“This is the plan for the time being … we’ll be monitoring the situation closely,” Mr Bhushan told the Financial Times. “Their financial conditions remain very challenging.”
In less than three months Kingfisher has gone from being India’s second-largest domestic airline – carrying just less than a fifth of domestic passengers – to fifth place, transporting 12.1 per cent of the 60.7m people flying in India.
Analysts said the scaled down fleet and flying routes would do little to restore Kingfisher’s finances. They added that the beneficiaries of Kingfisher’s decline would be its healthier competitor Indigo, which has been seeking to expand its routes both at home and internationally.
“This is the just the beginning of the end,” said Hormuz Mama, former editor of International Aerospace. “They have been scaling down their business month after month, at some point they will run out of options.”
Sharan Lillaney, an aviation analyst at Angel Broking, said: “Scaling down won’t help. The airline business is about scaling up as the margins are really small … I can’t see how they can survive by cutting [flights] further.”
Kingfisher, which is majority owned by Vijay Mallya, the liquor baron, has been battling for its survival for more than a year, beset by high taxes, soaring fuel prices and a bruising price war set in motion by state-run Air India.
The airline’s net loss for the three months ending December 31 jumped 75 per cent to Rs4.44bn ($90m), compared with Rs2.54bn a year earlier, and its net debt ballooned to about $1.4bn.
Widening losses have made it harder for the Bangalore-based carrier to pay its employees salaries and respect its tax dues. This forced India’s income tax department to freeze the airline’s bank accounts twice in recent months over unpaid service taxes and led hundreds of employees to quit the company.
Mr Mallya, who according to last year’s Forbes rich list has a personal fortune of $1.4bn, said the ailing airline needs at least Rs6bn to keep his remaining fleet flying.
Bankers close to the matter said they were working on a “bail-out” plan for Kingfisher following pressure from the government to save the ailing airline. But they added that a deal had not yet been finalised.
Several Indian newspapers reported that State Bank of India, which leads a consortium of banks that currently own about 25 per cent of Kingfisher, would lend the ailing airline as much as Rs16.5bn.
Shares of the cash-strapped carrier closed down 6.53 per cent on the Bombay Stock Exchange on Wednesday.