Kingfisher Q2 loss widens to Rs 754 cr; says revival plan soon
Mumbai: Debt-ridden Kingfisher Airlines on Thursday reported net loss of Rs 754 crore for the July-September quarter, a sharp increase from Rs 469 crore in the year-ago period, and said it is working on a plan to resume services.
The revenue plunged to Rs 200 crore during its second quarter of this fiscal from Rs 1,553 crore in the same period last year because of disruption in operations and eventual suspension of its licence by aviation regulator DGCA.
Even as the company's expenses declined across various heads, the firm suffered huge restructuring cost. Its tax expenses also rose sharply.
Announcing the result, the carrier said it is in discussions with various stakeholders to ensure that there are no future disruptions and expects to resume operations in the near future.
"Kingfisher Airlines is preparing a comprehensive plan for re-start of operations which will be shared with the DGCA and bankers," the carrier said in a BSE filing.
Shares of the company were trading at Rs 12.85, up 0.16 percent on the BSE at 1025 hrs.
The carrier is already saddled with accumulated loss of Rs 8,000 crore besides a debt burden of over Rs 7,524 crore, a large part of which has not been serviced.
The Directorate General of Civil Aviation (DGCA) had recently suspended the flying licence of Kingfisher following the airline's failure to come up with a viable plan of financial and operational revival.
It faces the risk of losing its licence if a revival plan is not submitted by next month, while bankers are working on plans to handle large scale defaults by the airline.
"After adjusting for finance cost of Rs 401 crore, a one-time cost of Rs 448 crore due to re-delivery of aircraft and restructuring, idle costs and taxes, the net loss was Rs 754 crore," the Kingfisher filing said.
The company has been in a 'holding pattern', operating a limited flight schedule since March this year. Holding pattern in aviation terminology means when an aircraft has to take several rounds in the air before landing.
"During the quarter under review, the company's difficult cash flow situation continued due to various factors resulting inter alia in delay of salaries and a curtailed operational fleet. This resulted in a certain section of the employees resorting to flash strikes which resulted in disruption of the company's scheduled operations," the company said.
Kingfisher was forced to declare a partial lockout which resulted in a show cause notice by the DGCA.
The DGCA has temporarily suspended the company's Scheduled Air Operator's Permit as a result of frequent cancellations of flight due to employee unrest till such time it submits a concrete and reliable plan ensuring safe, reliable, efficient and sustainable Scheduled Air Transport Services, Kingfisher said.
The company has settled its disputes with the employees who have all returned to work and is in the process of submitting the revival plan to DGCA.
Kingfisher said it is confident that it will be able to have the suspension of the operating permit revoked and resume operations at the earliest.
Restructuring, idle costs represent fixed cost associated with curtailment of operations during the period relating to aircraft on ground.
The details of such costs shown separately from their natural heads constitutes for the quarter ended September 30, 2012, of lease rentals Rs 16,559.47 lakh, employee costs Rs 4,200 lakh and other operating expenses Rs 711.86 lakh, the filing noted.
In terms of agreement entered into with a certain party in respect of assets taken on lease, the company is to pay lease rentals only in the event of breach of certain contractual obligations in future.
The company has sought extension of time to meet a part of its obligations which were to be fulfilled by September 30, 2012, which it is hopeful of receiving.
It further said that no provision is considered necessary as the company is confident of meeting the relevant obligations.
Additionally, the use fees (hourly and cyclical utilisation charge) paid in respect of these leased assets are, in accordance with the company's understanding, treated as maintenance reserves.