December 19, 2011 / 10:01 AM / 8 years ago

Kingfisher grounds 15 planes; banks working with airline

MUMBAI (Reuters) - Beleaguered Kingfisher Airlines KING.NS has grounded 15 planes in its fleet as it battles a prolonged cash crunch, a company executive told Reuters, as banks continue efforts to prop up the airline, which until recently was India’s second-largest.

A Kingfisher executive, who declined to be identified, told Reuters the airline had grounded 15 of its planes but did not say how long they had been grounded or why.

The executive was speaking after the Economic Times reported that Kingfisher had grounded some of its Airbus planes after it was unable to meet maintenance and overhaul expenses.

Kingfisher, controlled by flamboyant liquor tycoon Vijay Mallya, has been seeking additional working capital from its lenders.

The chairman of State Bank of India (SBI.NS), which heads the consortium of Kingfisher’s lenders, on Monday said banks are trying to help.

“We are trying to help Kingfisher,” State Bank of India Chairman Pratip Choudhuri told Reuters on Monday morning.

Asked if banks were open to lending more funds to the cash-starved airline, he said, “everything is on the table”.

Indian conglomerate Sahara, meanwhile, plans to lend Kingfisher more than 2.5 billion rupees, the Times of India reported on Saturday, citing sources.

A Sahara source who declined to be identified told Reuters on Monday that the group was planning to lend to the carrier at least that amount but did not give further details.

A Sahara spokesman declined to comment.

Kingfisher shares rose more than 2 percent and into positive territory after the SBI chairman’s comments. They were up 0.69 percent at 21.85 rupees in a weak Mumbai market as of late morning.

Its share price has fallen 67 percent since the start of the year, cutting its market value to about $202 million.

All but one of India’s six main airlines is loss-making, as carriers engage in aggressive price competition even as they are squeezed by the high cost of jet fuel and other expenses.

India’s aviation regulator is conducting a financial review of Kingfisher, a process that is ongoing, an official with the regulator said on Monday, declining to be identified.

Kingfisher’s active fleet has shrunken to 40 from 69 at the end of 2010, the Economic Times report said.

A Kingfisher spokesman declined to comment to Reuters.

An official source at Mumbai’s airport told Reuters that Kingfisher had grounded two aircraft there in recent weeks due to a lack of spare parts, but there were no new flight cancellations.

Kingfisher, which has never made a profit, has seen its market share shrink to third-place after it slashed flights beginning last month. Over 100 of its pilots have quit recently and suppliers, including airports and oil companies, have stopped extending credit to the airline.

Editing by Tony Munroe

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