Kingfisher plummets over safety fears as SBI calls it NPA
06 January 2012
The financial mire into which Kingfisher Airlines has landed itself in is looking increasingly bottomless. Apart from concerns expressed by the Directorate General of Civil Aviation (DGCA) about the airline's safety standards, the State Bank of India has declared loans made to it a non-performing asset.
Shares of Kingfisher Airlines, promoted by liquor baron Vijay Mallya, plunged over 10 per cent on both the Bombay Stock Exchange and National Stock Exchange in morning trading after news of the DGCA strictures.
This is despite both the regulator and civil aviation minister Ajit Singh saying that the airline was in no danger of having its licence cancelled or being forced to shut down; perhaps indicating that more government-sponsored bailouts might be on their way.
The DGCA has given Kingfisher till Monday to present a detailed plan for both financial recovery and safety. This includes getting 20 grounded aircraft of a fleet of 69 back into the air.
The DGCA initiated an audit of airlines after Kingfisher cancelled a number of flights in November as it was unable to meet airport and fuel charges. The civil aviation regulator has also expressed concern over airlines overlooking safety issues.
Around the same time this week, SBI chairman Pratip Chaudhuri said the airline had become an NPA for the bank. He said SBI has an exposure of Rs1,458 crore to Kingfisher.