Kingfisher Air Q3 loss widens, expect rough skies ahead

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Kingfisher Air Q3 loss widens, expect rough skies ahead

Billionaire Vijay Mallya-led Kingfisher Airlines posted a net loss of Rs 444 crore for quarter-ended December 2011, as fuel costs surged and the company cut flights due to cash crunch.

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Moneycontrol Bureau

Kingfisher Airlines  (KFA) has reported a 75% jump in its net loss to Rs 444 crore for the December quarter from a year earlier amid high fuel cost, significant flight cuts and a weaker rupee, said the company in a statement.

The airline which has discontinued operations on its low cost arm Kingfisher Red last year also saw its revenues drop 5% to Rs 1547 crore, year-on-year.

""Steep depreciation of the Indian rupee coupled with consistently high crude oil prices has led to a challenging quarter for the Indian aviation industry," said the airline. The airline incurs around 50% of its expenses in dollar terms and hence had a significant jump in its cash outgo as the rupee weakend over 12% against the dollar during the period under review.

KFA has been in news for the past few months for its aircraft being grounded by the Directorate General of Civil Aviation on safety concerns. Also, the airline which has never made profits since its inception have seen its share price plunge over 60% in the past one year, bringing down the market value of the airline to Rs 1,300 crore.

However, post the result announcement, its shares were up 2.24% to Rs 27.35 at 9:15 hours.

The airline, which said last month it was in talks with Hong Kong-based distressed debt firm SC Lowy Financial for a possible investment, this month put on hold plans to join the global oneworld alliance till its completes its financial restructuring.

By posting Q3 losses, KFA joins the league of Jet Airways and SpiceJet which also posted losses for the December quarter as surging fuel cost hurt their profitability. But this month, a high powered battery of ministers appointed by the government okayed direct import of fuel, which has been the industry's demand for quite some time.

But on the contrary, airlines are not so happy with this decision and have put up an argument saying that importing fuel will not help lower their cost as they will have to spend a lot on infrastructure and logistics to carry fuel to various airports where they can refill their aircraft.

However, a proposal to allow foreign airline to pick up stakes in Indian carriers is pending with the cabinet and experts say as and when it gets a nod, airlines will be able to come out of financial distress alongside enhancing market share.

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