Lenders to the ailing Kingfisher Airlines are to review the status of its account next week, after the company announced losses in excess of Rs 1,000 crore in the financial year’s fourth quarter, ended March.
“The condition of the airline has gone from bad to worse,” Pratip Chaudhuri, chairman, State Bank of India (SBI), told reporters after the bank’s annual general meeting here on Friday. Chaudhuri said the airline had not done any equity infusion, a part of the condition for the restructuring of loans done in 2010-11. Promoter Vijay Mallya was supposed to infuse fresh equity. However, as of now, SBI would not proceed with any legal action against the airline, he said. Many lenders, including SBI, Bank of India and Central Bank of India treated the Kingfisher account as a non-performing asset (NPA) in 2011-12, as the company defaulted on payments to some lenders. However, some like Indian Overseas Bank continue to treat it as a standard asset, as the airline is making interest payments. Its debt is in excess of Rs 7,000 crore.
Kingfisher’s loss of Rs 1,151.5 crore in the March quarter was its worst-ever in any quarter. The Q4 losses have trebled from Rs 355.6 crore in the January-March quarter of 2010-11. The troubled carrier attributed the loss’ widening to a steep rise in fuel prices and sharp depreciation of the rupee. Sales fell 55 per cent to Rs 741 crore. Kingfisher has scaled down its operations dramatically in recent months — stopping international operations completely — and now has the smallest market share among Indian airlines, at just 5.4 per cent.
The airline had said it was continuing with a ‘holding plan’ of a limited fleet to contain losses in this tough and unprecedented operating environment for the Indian aviation industry.
The lenders had earlier ruled out any more lending to Kingfisher, saying the airline had no room for further borrowing to run operations. While the lenders had explored the option of another round of debt restructuring, it can only happen if all of them declare this an NPA, which is not the case at present. With the new financial information, the banks would have to revalidate the viability of the airline.