Rough skies ahead for Kingfisher, leasing plans disrupted

Kingfisher Airlines is in for a bumpy flight even as its shares found a few takers due to lower crude prices. The UB Group-owned airline is finding it difficult to get aircraft on lease due to its debt ridden balance sheet, say sources. The leased aircraft are to be deployed on the airline’s network, as the domestic air traffic is growing 15% y-o-y.
Earlier this year, Kingfisher had implemented a debt recast plan that entailed conversion of 30% of its debt into shares, which were issued to its lenders and subsidiaries. The recast helped the airline to cut the debt on its books to Rs 6,007 crore from Rs 7,651 crore last year.
A query sent to Kingfisher did not elicit any response. Repeated calls to Ravi Nedungadi, president and CFO, UB Group, also went unanswered.
Speaking about the future of the airline, portfolio manager PN Vijay told moneycontrol.com that “it will take some time for debt-laden Kingfisher to show a healthier balance sheet due to operational glitches. Investors need to be careful before going on a buying spree.” The airline stock closed at Rs 38.45, down 1.28% on the Bombay Stock Exchange.
Kingfisher has never made a profit since its inception in 2005. In fiscal year 2011, its net loss was Rs 1,027 crore on a total income of Rs 6,496 crore whereas in fiscal year 2010, its net loss stood at Rs 1,647 crore on a total income of Rs 5,271. The airline has not been able to go ahead with a plan to sell global depository receipts (GDRs) to raise $300 million.
12/07/11 Moneycontrol.com

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Categories: Kingfisher Jul 2011