Kingfisher Airlines faces operational shutdown: CAPA
New Delhi: Kinghfisher Airlines may have to shut down operations if USD 600 million cash is not infused in the next two months, the Centre for Asia Pacific Aviation (CAPA) said Friday.
"Kingfisher is able to continue as a result of daily infusions of funding by the promoter. However, with mounting losses the situation is unsustainable. In Q1 (first quarter, 2012-13) the promoters invested USD 133.9 million, but this barely allows the airline to survive," CAPA said
in a report on the Indian airline industry's performance in the first quarter of the current fiscal.
"A viable turnaround is unrealistic without a significant re-capitalisation of the airline. Without an investment of approximately USD 600 million in the next 30-60 days, Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and re-organise," it said.
According to the advisory company, a restructuring of the airline will require banks to take a significant hit as they have huge exposure to bad debt given to the carrier.
The airline also faces frequent labour unrest with one group or the other of employees going on flash strike demanding payment of salaries and other reimbursements.
The airline had the lowest market share in July which stood at 3.4 percent.
The report estimated the airline to make a total loss of USD 220-USD 260 million in 2012-13. The company had reported a net loss of Rs.650.78 crore (USD 117 million) for the quarter ended June 30, 2012.
"The uncertainly regarding the scale of Kingfisher's operations means that any outlook for the carrier's financial is very difficult to estimate, and its full year loss could be higher than expected," the report said.
On Air India, CAPA said the airline would be able to cut losses for 2012-13 to around USD one billion on improved domestic operations. It had earlier estimated the loss to be of USD 1.3 billion.
AI's domestic revenue increased 6 percent in the quarter under review from the corresponding quarter of last fiscal. It also achived third highest domestic market share in August at 18.2 percent.
"The national carrier needs to take advantage of the current domestic market conditions to focus on its restructuring by further reducing its cost base, improving productivity and solving its outstanding HR issues," the report said.
CAPA said the four private players -- SpiceJet, IndiGo, GoAir and Jet Airways -- are on track to achieve USD 200 million profit for 2012-13.
"In the first quarter ended June 30, these four private carriers are estimated to have achieved a profit of approximately USD 40 million," CAPA added.