Kingfisher to operate only 20 aircraft, no overseas flights: Mallya

Kingfisher Airlines has said it will halt international flights and fly just 20 planes as it seeks funding, hours after the government warned the carrier's license may be canceled if it fails to meet safety norms and financial viability conditions.

The embattled airline, which has debts of $1.3 billion, is scrambling to raise funds after banks refused to lend more for its day-to-day operations.

A big cutback in flights has reduced its revenue, leaving the carrier controlled by flamboyant liquor baron Vijay Mallya with little cash to pay staff, airports, tax authorities and lenders.

"If he gives a plan and says I have that many planes, that much schedule, then why should we cancel?," Aviation Minister Ajit Singh said ahead of Mallya's meeting with the regulator to submit a recovery plan for the carrier.

"The problem is, (in the) last two to three months, he has given several plans and he has not adhered to any of them," Singh said, warning that the airline was liable for prosecution over unpaid taxes.

"If passenger safety is compromised we'll not let any airline fly. Safety norms also involves financial viability," Singh said.

Kingfisher said it had submitted an interim plan to operate 20 planes on between 110 and 125 domestic routes a day, and halt international flights by April 10. The carrier's fleet, which earlier had 64 planes, now has 47.

"We have not submitted an ambitious plan. We have submitted a holding plan," Mallya told reporters.

The company has said it is in talks with potential investors, some of which would require India to allow foreign carriers to own up to 49 percent of Indian airlines, a change the government is considering.

"Some of the potential investments depend on the change in FDI (foreign direct investment) policy but there are other investors we are in discussions with," Kingfisher Chief Executive Sanjay Aggarwal told reporters.

Cancellations have already disrupted the travel plans of thousand of passengers across the country and pushed up fares.

UNFRIENDLY SKIES

Shares of Kingfisher Airlines, which has a market capitalisation of about $200 million, hit an all-time low in early trade on Tuesday before closing 5.5 per cent lower.

Kingfisher has never made a profit in a struggling Indian airline industry that is saddled with high fuel costs, stiff competition and low fares.

Five of India's six airlines are in the red and domestic carriers are likely to lose a total of $2.5 billion in the year through March, according to the Centre for Asia-Pacific Aviation (CAPA), an industry consultancy.

"As a government, we don't want to shut down any industry. There are employees and customers involved. Kingfisher had 22 percent traffic. If we close it suddenly, where will the fares go?," Singh said.

Global industry body IATA has suspended Kingfisher from its settlement system, restricting bookings through overseas agents, hitting ticket sales. On Monday, the last of Kingfisher's independent directors resigned.

The carried needs at least $500 million immediately to keep flying and $800 million to return to full operations, according to CAPA.

Kingfisher's billionaire chairman owns one of the world's most expensive yachts as well as cricket and Formula One teams, but he has been unable to raise fresh equity for an airline that was once India's second biggest by passengers.

"Mallya has been talking a lot about capital but I think he's only doing it to calm the situation and postpone the problems. We have not seen any money," said a senior executive at a state-run bank, which recently downgraded Kingfisher's loan to non-performing status.

There are no provisions for companies to declare themselves legally bankrupt in India.

"Right now, it is a complicated situation. We are closely monitoring," said the banker, who requested anonymity as he was not allowed to talk about clients.

Copyright @ Thomson Reuters 2012

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Kingfisher to suspend all international flights, says Vijay Mallya

New Delhi:  Kingfisher Airlines, owned by liquor baron Vijay Mallya, has decided to end its international flights. The airline, which has a debt of 7000 crores, has committed today to running 125 domestic flights everyday using 20 aircraft. Its fleet number was 64 till a few months ago. Mr Mallya has promised, that unlike in the last few months, these flights will not be cancelled at the last minute because of the airline's expansive financial problems.
Mr Mallya had been summoned to meet the Directorate General of Civil Aviation (DGCA) today to explain recovery plans. Earlier, Civil Aviation Minister Ajit Singh warned that Kingfisher could lose its license if it was not able to furnish a believable turnaround strategy, or if the DGCA found safety being compromised. DGCA chief Bharat Bhushan told NDTV today that a special team conducts safety checks on Kingfisher flights every day to ensure passengers are not at risk.
"The problem is, last two-three months, he has given several plans and he has not adhered to any of them," Mr Singh said. "If passenger safety is compromised, we'll not let any airline fly. Safety norms also involve financial viability," he added. After the meeting with Mr Mallya, the DGCA chief said he had no plans for now to revoke Kingfisher's license.
Mr Mallya said that operating international flights does not make sense given that it has been suspended by IATA which helps airlines by serving as the middlemen between them and various service providers like caterers and ground handlers for passengers and baggage at different airports. Without IATA, Kingfisher would have to handle these payments directly in different currencies - a logistical nightmare. Mr Mallya said that he is not setting an ambitious target for the summer, and said he is hopeful of foreign investment. The government is considering a proposal to allow foreign airlines to own upto 49% of Indian carriers.
Kingfisher employees including pilots have not been paid for several months. Recently, the airline has blamed this on the income tax department which has frozen several of its accounts. Today, Mr Mallya said he hopes to clear all outstanding bills soon for employees.

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Kingfisher to have full recovery plan in 2-3 days: Vijay Mallya

Cash-strapped Kingfisher Airlines will have a full recovery plan in place in 2-3 days, chairman Vijay Mallya said on Thursday.

One foreign airline and two non-airline foreign investors are interested in buying stake in the carrier, Mallya told reporters after a meeting with the debt-laden airline's pilots, who have been protesting against delayed salaries.

Mallya today met with striking pilots to end a row over unpaid wages that has led to cancellation of scores of flights.

Mallya did not disclose details of the meeting, but said it was a "productive" one.

"The pilots are extremely supportive to the company," Mallya said while addressing the media after his meeting.

Mallya said his top priority now would be to pay the pilots their salary. He also assured the press that KFA's flights would be on time.

The pilots' strike has forced the cash-strapped carrier to cancel more flights on top of those it scrapped last month to reduce expenses.

Kingfisher, which earlier this week announced it was curtailing its overseas flights in order to lower costs, had initially announced it was cutting its daily flight schedule to 175 from around 250.

The pilots' strike has further reduced the number of flights to around 100 a day.

At least 60 pilots have already left the airline to fly with rivals according to PTI.

The carrier has never turned a profit since its launch in 2005 and owes millions of dollars to suppliers, lenders and staff.

Its bank accounts have been frozen by authorities due to the non-payment of taxes and it has been dropped from a vital global payments and booking system run by the International Air Transport Association (IATA).

The airline's net loss widened sharply to Rs 4.44 billion ($88 million) in the three months to December from a loss of Rs 2.54 billion a year earlier, while its debt totals at least $1.3 billion.

India's airline industry - once a symbol of the country's economic progress - is now plagued by high fuel prices, fierce competition, price wars and inadequate airport infrastructure, with Kingfisher one of the worst-hit firms.

The airline has said "positive and immediate action is being taken on all fronts to cut costs".

Kingfisher's market share has slid to fifth position at 11.3 per cent, from second earlier, according to data on the civil aviation regulator's website.

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Vijay Mallya pumps in $ 32 million into Force India

London: Sahara Force India team principal Vijay Mallya has pumped in $32 million into his Formula One team ahead of the season opener in Melbourne on Sunday.

Watson, the personal investment company used by the liquor baron, has loaned Force India nearly $10 million while Mallya's Kinghfisher Airlines and his beer and spirit arm has generated the remaining $22 million through sponsorship, The Scotsman reported Monday.

The Silverstone-based team is eying to better its last year's sixth place finish in the 2012 Constructors' Championship.

Force India found a co-owner Subrata Roy led Sahara Group last year when the Indian company bought a 42.5 percent stake in the F1 team. Sahara said that it would invest a further $100 million into the mid-field outfit.

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