Kingfisher Airlines, the airline company owned by Vijay Mallya-promoted UB Group, has reported a net loss of Rs 413 crore for the third quarter for the current financial year as against a net loss of Rs 427 crore for the corresponding period last year.
The company attributed the losses to initiation costs of Rs 174 crore for its international business, a Rs 103-crore increase in interest expenses and an exchange rate impact of dollar denominated expense of about Rs 60 crore.
During the period, the company’s top line increased by close to 7 per cent to Rs 1,447.8 crore even as it reduced its capacity by 15 per cent. The airline, which is facing the heat from oil marketing companies for not paying its dues on aviation turbine fuel, is also witnessing a decline in the number of its passengers.
The net loss of Rs 413 crore includes a deferred tax asset of Rs 216 crore, an element that was not in the corresponding previous quarter. According to a Kingfisher Airlines spokesperon, “This act provides that if a company is anticipating to make profits in the future, you can create a deferred tax asset by reducing the losses incurred during the period.”
A deferred tax asset is an asset on a company’s balance sheet that may be used to reduce any subsequent period’s income tax expense. Deferred tax assets can arise due to net loss carryovers, which are only recorded as assets if it is deemed more likely than not that the asset will be used in future fiscal periods.
Detailing the reasons behind the loss, the company said that the operating costs included a one-time provisioning of Rs 30 crore for contingencies on return of aircraft. “These represent one-time costs for the lease return maintenance conditions and a dispute relating a lease,” a statement from Kingfisher said.
Additionally, the company also said that the lease rentals also include a payment of Rs 30 crore for grounded aircraft. “These aircraft have been grounded pending return that has resulted in the reduction in deployed capacity by 15 per cent during the quarter,” the statement noted.
