Kingfisher woes mount as Govt. rules out help

Tuesday, 21 February 2012 00:00 - - {{hitsCtrl.values.hits}}

NEW DELHI, Feb 20 (Reuters) - India’s aviation regulator has summoned top executives of Kingfisher Airlines to explain large number of flight cancellations since Saturday, even as the aviation minister ruled out providing any aid to the loss-making carrier.

On Saturday, 32 out of the 240 flights that Kingfisher operates each day were cancelled and the situation was likely to continue for four days, the airline said in a statement.

“It is a very serious matter, we recognize it and DGCA has called Kingfisher to find out what’s going on, what are their plans and why did not they anticipate the problems and inform DGCA before,” Civil Aviation Minister Ajit Singh told reporters.

The Directorate General of Civil Aviation (DGCA) is the sector regulator in India.

Kingfisher has so far failed in efforts to get fresh equity capital. Banks own about a quarter of its shares after the company’s debt was restructured early last year.

State-run State Bank of India, the lead bank, has refused to lend further if the airline did not infuse fresh equity.

Singh said it was the government’s responsibility to help national carrier Air India, but in case of private airlines such as Kingfisher, it was for the bank to take a call on providing fresh loans.

Kingfisher, named after the country’s most famous beer, lost 4.4 billion rupees in fiscal third quarter that ended in December, and its bank accounts had been frozen by the tax authorities over outstanding dues.

“As far as private airlines are concerned, they are talking to banks, and banks will lend them money only if they are confident that their business plans will succeed, only if it is within RBI guidelines,” Singh said.

When contacted by Reuters, DGCA chief E.K. Bharat Bhushan declined to comment.

Meanwhile, passengers have been venting their anger at the airline on social networking websites, blaming the company’s inability to provide on time information about cancelled flights.

India’s airline companies, on course to lose $3 billion for the year ending in March, have struggled with low fares, high jet fuel prices and massive competition. Five out of six major carriers in India are loss-making. Shares of Kingfisher have gained 1.5 percent since mid-September, when its auditors first cautioned the company needs equity infusion to function as a going concern. The benchmark index gained 9.5 percent in the same period.