Kingfisher drops its fish

Life seems to have come a full circle for Kingfisher Airlines. In 2006 it had decided to launch Kingfisher First, the business-class segment of Kingfisher Airlines brand. At that time its chairman, Mr Vijay Mallya, had told Business Line: “Our economy is growing.
The propensity and willingness to spend is there. When we launched the airline, we were clear that we were not targeting the Rs 400-Rs 500 category of passengers. There is a discerning class that is willing to pay for service.” But in the same year he acquired Air Deccan and renamed it Kingfisher Red to provide low-priced air travel. Now he has announced that he is getting out of the low-end business.
The move comes when the company is recasting its debt. Loans in excess of Rs 1,300 crore and funds from promoters of approximately Rs 745 crore have been converted into share capital.
The interest rate on the recast loans has been lowered to 11 per cent and the repayment period extended to nine years.
During the most recent quarter ended June 2011, Kingfisher delivered a better financial performance than other listed Indian carriers.
On domestic operations, it reported an EBITDAR (Earnings before Interest, Depreciation, Amortisation, and Rentals) margin of 15.4 per cent which compares very favourably with 6.4 per cent and 7.2 per cent reported by others .
03/10/11 Ashwini Phadnis/Shishir Sinha

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Categories: Kingfisher Oct 2011