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Kingfisher drops deeper into red

BS Reporter / Bangalore Feb 17, 2012, 00:47

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Kingfisher Airlines has reported a 75 per cent increase in net loss to Rs 444 crore for the third quarter of this financial year, as against a loss of Rs 254 crore in the corresponding quarter of the last. Total revenues were down five per cent at Rs 1,547 crore. The company, forced to reduce capacity as part of protracted recapitalisation efforts, could not contain expenditure, which rose seven per cent to Rs 2,125 crore and had to take a further hit of Rs 80 crore for an exceptional item.

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Results Snapshot more  Sales 6378.78  Total Expenses 7378.59  Net Profit -1532.03  EPS(TTM) 497.78  Equity -26.52

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The company is wilting under debt of close to Rs 7,000 crore and has been lobbying for support with all stakeholders — creditors, aircraft lessors, maintenance vendors, airport operators, etc.

However, other than piecemeal agreements, Kingfisher Airlines has not been able to strike any concrete pact. Early last quarter, it said it would do away with the low-cost business model and would focus on full service. Aircraft were supposed to be modified to fit in more economy-class seats to raise the revenue per seat.

The company said there was 17 per cent capacity addition in the industry, which grew 12 per cent, bringing down the seat factor to 74 per cent from the earlier 77 per cent. "We also had to bear the brunt of high prices of crude oil, further compounded by a steep depreciation of the Indian rupee," the company said.

Kingfisher Airlines, which pays out more interest than its market capitalisation, is having discussions with global private equity funds to infuse $200 million, after which lenders would consider extending the credit limit.

Five per cent capacity reduction had a cascading effect on almost all operating parameters as the number of departures dropped 13 per cent, revenue passengers dropped 15 per cent, and ASKM (available seat kilometres) dropped five per cent.

The only silver lining was that the Ebidtar (earnings before interest, taxation, depreciation, amortisation and rental costs) was a positive Rs 125 crore during the quarter. This is one of key parameters in the industry, as almost all airlines do not own aircraft but lease them. Though the parameter is in positive territory, it has fallen as much as 55 per cent.