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Jul 12, 2012, 08.23 AM IST | Source: Moneycontrol.com

KFA keen to cut down flights due to high expense, low sales

Kingfisher Airlines (KFA) has approached the Directorate General of Civil Aviation (DGCA) seeking approval to reduce its current flight operations, a civil aviation ministry source told moneycontrol.com.

 Shaheen Mansuri
moneycontrol.com

Kingfisher Airlines (KFA) has approached the Directorate General of Civil Aviation (DGCA) seeking approval to reduce its current flight operations, a civil aviation ministry source told moneycontrol.com. With expenses outstripping revenues by a wide margin, the airline has no other option but to downsize flights further, the source added.

When contacted, the KFA spokesperson denied that any such request was made to the DCGA.

Domestically, the airline currently has around 18-20 aircraft operating more than 100 flights daily. It is learnt that it wants to scale it down further by at least 30%. KFA's quarterly expenditure on an average has been around Rs 1,700 crore, while revenues are now down to around Rs 800 crore. KFA is in a bind. The airline has been doing everything to reduce cost; cutting down on flights and staff. But less flights also means lower revenues.

The airline whose market share is now reduced to a fourth has lost its bargaining power and is selling tickets at least 20% lower then its competitors just to regain its market it lost due to reduced flight operations.

This has put the airline in a tight spot as its cost per mile is higher then its revenue per seat. For FY12 its cost per seat averaged at Rs 4.75 million while its revenue was Rs 4.29 million.

It may be recalled that the airline's CEO recently comforted his employees that the airline is actively pursuing fund raising plans and once foreign direct investment is allowed in the sector  a foreign carrier will pick up stake in the carrier. However, there is a raging debate on who will want to invest in the loss-laden carrier?

shaheen.mansuri@network18online.com


 

Kingfisher Air stock price

On November 24, 2014, at 15:11 hrs Kingfisher Airlines was quoting at Rs 1.35, up Rs 0.03, or 2.27 percent. The 52-week high of the share was Rs 5.55 and the 52-week low was Rs 1.26.


The latest book value of the company is Rs -166.59 per share. At current value, the price-to-book value of the company was -0.01.

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