Kingfisher puts up brave face even as losses mount
08 November 2012
Kingfisher Airlines, liquor baron Vijay Mallya's high-flying dream, is getting mired even further in the red – it has posted widened losses of Rs753.55 crore for the July-September quarter against Rs468.66 crore for the same quarter last year, as a result of higher finance costs and costs associated with its fleet being grounded.
Mallya and the airline's management continue to put up a bold face, ever maintaining that its setbacks are temporary and a fresh start is just around the corner. It acts pained and let down when its staff, unpaid for months on end, refuses to work.
The airline said today that it had incurred restructuring and idling costs of Rs214.71 crore for the quarter to maintain the grounded planes. It also had a redelivery cost of Rs233.44 crore for the quarter against Rs10.96 crore for the same quarter last year. The finance cost was Rs401.43 crore in the latest quarter against Rs334.38 crore last year.
The airline has never showed a profit since it was launched in 2004, and it has been grounded since 1 October due to a strike by pilots and engineers followed by the cancellation of its flying licence by the Directorate General of Civil Aviation (DGCA). Current estimates put its debt burden at around Rs13,500 crore.
The airline today once again iterated that it would produce a credible recovery plan by early December, the deadline set by its creditors as well as airline regulators. But most analysts see this as hot air, as there are no new lenders or sources of such large funds in sight.
Kingfisher needs at least Rs3,000 crore to get airborne again, and Mallya would have to sell his liquor empire to raise that kind of money – something he is clearly not prepared to do. He has publicly said he will ''not sell the family silver'' to keep the airline going.