Kingfisher Airlines Ltd. (KAIR), controlled by billionaire Vijay Mallya, slumped in Mumbai after it cut flights and approached India’s government for help as it works to restructure debt and pare losses.
The airline, India’s second-biggest by market share, fell as much as 19 percent, the most in intraday trading since November 2008. It was down 9.7 percent at 19.6 rupees as of 3:04 p.m. United Breweries (Holdings) Ltd., Mallya’s holding company and Bangalore-based Kingfisher’s biggest shareholder, declined as much as 17 percent.
India’s finance ministry may ask banks to help Kingfisher restructure its debt after the carrier sought the government’s assistance, Civil Aviation Minister Vayalar Ravi said in New Delhi today. Kingfisher has scrapped 167 flights since Nov. 8 and some of its lessors plan to reclaim aircraft because of overdue fees, the Economic Times newspaper reported, without saying where it got the information.
“Unless there is an infusion of money at this point, I don’t really see how it’s going to survive,” said Rishikesha Krishnan, a professor of corporate strategy at the Indian Institute of Management, Bangalore, who has written papers about Indian aviation. “That infusion of money has to come from Mallya. I can’t see anybody else who’s going to put money in.”
Prakash Mirpuri, a Kingfisher spokesman, said in a mobile- phone text message that he is on medical leave, and referred calls to Kingfisher’s external public relations agency. Kingfisher Chief Executive Officer Sanjay Aggarwal didn’t answer text messages and four calls to his mobile phone. Mobile phones of Mallya, the carrier’s chairman and managing director, were switched off.
New Planes
Kingfisher has posted losses totaling about 47 billion rupees ($935 million) over the last three years as it added new planes and competed against state-owned Air India Ltd. Earlier this year, it won as much as 12.1 billion rupees of new loans after banks agreed to convert 13 billion rupees of existing debt into preferred shares.
The airline isn’t operating 36 percent of flights it has scheduled for the winter season, E.K. Bharat Bhushan, Director General of Civil Aviation, said in New Delhi. The slots at airports that Kingfisher isn’t using will be given to other carriers, he said without elaboration.
Mallya, 55, doubled personal guarantees against the carrier’s debt to 61.7 billion rupees in the year ended March, according to the airline’s annual report. The carrier paid him 508.7 million rupees for loan assurances, said the report, published in September.
Debt Guarantees
United Breweries also more than doubled its debt guarantees to 168.5 billion rupees. The company, which owns 40 percent of Kingfisher, has dropped 71 percent this year.
Kingfisher has about $1.5 billion of debt and a debt-to- asset ratio of 82, according to data compiled by Bloomberg. Jet Airways (India) Ltd., the nation’s largest carrier, has a debt- to-asset ratio of 67. SpiceJet Ltd. (SJET), India’s only listed budget carrier, has a ratio of 7.7.
Kingfisher and SpiceJet have tumbled about 70 percent this year, while Jet Airways dropped 65 percent as they struggle to turn surging travel demand into profit. Jet has posted losses for at least four years. The number of domestic passengers in India rose 18.6 percent this year through August to 39.6 million, according to the Director General of Civil Aviation’s website.
Promoting Beer
Mallya formed Kingfisher Airlines in 2005, naming it after the beer UB Group brews under the Kingfisher brand. He handpicked each of the flight attendants and instructed them to treat passengers as “guests in my own home,” according to a video shown on Kingfisher flights.
In 2008, Kingfisher completed a merger with Deccan Aviation Ltd., which operated India’s first low-cost airline, Air Deccan. Kingfisher had a fleet of 66 planes ranging from Avions De Transport Regional turboprops to Airbus SAS A330s as of March 31, according to its annual report.
The carrier has also ordered five Airbus A380 planes, which it expects to start taking delivery from 2016.
Mallya inherited the UB Group from his father in 1983 at the age of 27. He has since built United Breweries into India’s biggest brewer and United Spirits Ltd. acquired brands including Whyte & Mackay.
Mallya had a net worth of $1.1 billion, and was ranked 49th among India’s billionaires, according to Forbes magazine.
The airline, India’s second-biggest by market share, fell as much as 19 percent, the most in intraday trading since November 2008. It was down 9.7 percent at 19.6 rupees as of 3:04 p.m. United Breweries (Holdings) Ltd., Mallya’s holding company and Bangalore-based Kingfisher’s biggest shareholder, declined as much as 17 percent.
India’s finance ministry may ask banks to help Kingfisher restructure its debt after the carrier sought the government’s assistance, Civil Aviation Minister Vayalar Ravi said in New Delhi today. Kingfisher has scrapped 167 flights since Nov. 8 and some of its lessors plan to reclaim aircraft because of overdue fees, the Economic Times newspaper reported, without saying where it got the information.
“Unless there is an infusion of money at this point, I don’t really see how it’s going to survive,” said Rishikesha Krishnan, a professor of corporate strategy at the Indian Institute of Management, Bangalore, who has written papers about Indian aviation. “That infusion of money has to come from Mallya. I can’t see anybody else who’s going to put money in.”
Prakash Mirpuri, a Kingfisher spokesman, said in a mobile- phone text message that he is on medical leave, and referred calls to Kingfisher’s external public relations agency. Kingfisher Chief Executive Officer Sanjay Aggarwal didn’t answer text messages and four calls to his mobile phone. Mobile phones of Mallya, the carrier’s chairman and managing director, were switched off.
New Planes
Kingfisher has posted losses totaling about 47 billion rupees ($935 million) over the last three years as it added new planes and competed against state-owned Air India Ltd. Earlier this year, it won as much as 12.1 billion rupees of new loans after banks agreed to convert 13 billion rupees of existing debt into preferred shares.
The airline isn’t operating 36 percent of flights it has scheduled for the winter season, E.K. Bharat Bhushan, Director General of Civil Aviation, said in New Delhi. The slots at airports that Kingfisher isn’t using will be given to other carriers, he said without elaboration.
Mallya, 55, doubled personal guarantees against the carrier’s debt to 61.7 billion rupees in the year ended March, according to the airline’s annual report. The carrier paid him 508.7 million rupees for loan assurances, said the report, published in September.
Debt Guarantees
United Breweries also more than doubled its debt guarantees to 168.5 billion rupees. The company, which owns 40 percent of Kingfisher, has dropped 71 percent this year.
Kingfisher has about $1.5 billion of debt and a debt-to- asset ratio of 82, according to data compiled by Bloomberg. Jet Airways (India) Ltd., the nation’s largest carrier, has a debt- to-asset ratio of 67. SpiceJet Ltd. (SJET), India’s only listed budget carrier, has a ratio of 7.7.
Kingfisher and SpiceJet have tumbled about 70 percent this year, while Jet Airways dropped 65 percent as they struggle to turn surging travel demand into profit. Jet has posted losses for at least four years. The number of domestic passengers in India rose 18.6 percent this year through August to 39.6 million, according to the Director General of Civil Aviation’s website.
Promoting Beer
Mallya formed Kingfisher Airlines in 2005, naming it after the beer UB Group brews under the Kingfisher brand. He handpicked each of the flight attendants and instructed them to treat passengers as “guests in my own home,” according to a video shown on Kingfisher flights.
In 2008, Kingfisher completed a merger with Deccan Aviation Ltd., which operated India’s first low-cost airline, Air Deccan. Kingfisher had a fleet of 66 planes ranging from Avions De Transport Regional turboprops to Airbus SAS A330s as of March 31, according to its annual report.
The carrier has also ordered five Airbus A380 planes, which it expects to start taking delivery from 2016.
Mallya inherited the UB Group from his father in 1983 at the age of 27. He has since built United Breweries into India’s biggest brewer and United Spirits Ltd. acquired brands including Whyte & Mackay.
Mallya had a net worth of $1.1 billion, and was ranked 49th among India’s billionaires, according to Forbes magazine.
Source : Bloomberg.com
