Hitting multiple air pockets

Mumbai: While higher fuel costs and irrational pricing are key concerns, infusion of funds to retire debt is crucial if Kingfisher Airlines has to improve its financials.
News about a note by Kingfisher Airlines’ auditors in the 2010-11 annual report about the state of company finances saw the scrip lose five per cent intra-day on Thursday before recovering a tad. This adds to the stock’s overall decline (down a total of 10 per cent) over the past week, consequent to fears that a rise in aviation turbine fuel (ATF) prices, a weakening rupee and rising competitive pressures could lead to a further deterioration of its finances.
The auditors have indicated that the company’s ability to continue as a going concern, given that its net worth has eroded, depends on its ability to bring requisite funds to meet obligations. However, the management says lenders have independently assessed and found the airline to be viable as a going concern. The company has also said that while there have been delays in statutory payments during 2010-11, no dues as on date are unpaid.
The key trigger for the stock going ahead will be its ability to raise Rs 2,000 crore from a rights issue.
16/09/11 Ram Prasad Sahu/Business Standard

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Categories: Kingfisher Sep 2011