Liquor-turned-Airlines tycoon Dr Vijay Mallya said the promoters of Kingfisher Airlines Ltd had pumped Rs 1,150 crore into the debt-laden airline since April, and were making all efforts to further recapitalise the company.
Kingfisher officials are expected to have a meeting with its major lenders - led by the State Bank of India and Bank of Baroda - on Thursday. The meeting will be the first such held between the parties, since the UPA government's decision to allow 49% foreign direct investment in the Indian aviation sector earlier in the month.
The airline, which is yet to report a profitable quarter since its inception in May 2005, has been reeling under a massive debt load and accumulated losses of about Rs 15,000 crore.
It has been the biggest casualty in the turbulence affecting the Indian aviation industry, which has been hit hard by a combination of high fuel taxes, airport charges and low fares. At one point the second-largest carrier in the country, Kingfisher is now the smallest operator in terms of market share.
For the quarter ended June 30, the airline's loss widened to Rs 651 crore from Rs 264 crore a year ago, prompting widespread fears about its ability to continue as a going concern.
"It is wrong to say domestic airlines in India are profitable. None are making profits," Mallya said in Bangalore on Wednesday.
His statement comes barely a month after bigger rival Jet Airways announced a surprise profit for the same quarter, earning Rs 24.7 core, compared with a loss of Rs 123 crore for the year-ago period, driven largely by the performance of its low-cost arm Jetlite.
However, Mallya has consistently denied that Kingfisher was on the verge of closure, or for sale, maintaining that a number of foreign investors have professed an interest in picking up equity in the airline.
"Every airline is struggling, therefore it is prudent to to cut back on capacity to reduce losses," the chairman told shareholders at the company's 17th annual general meeting.
According to a report by Kingfisher's auditors released prior to the government's decision to allow FDI in aviation, the airline has been struggling to make payments to its employees, whose number has gone down by 1,651 people to 5,696 employees as the airline is in a 'holding pattern', awaiting policy changes.
"Due to the current situation, your company is operating as a 'holding pattern' with limited operation, pending policy changes which are in the offing," the director's report said.
However, Mallya also debunked media reports that the airline is operating a fleet of less than 10 aircraft.
"It is untrue that we are flying only seven aircraft. We have 40 aircraft that appear on our operator permits, and are flying 15 of them on over 80 routes," he said.
Mallya, however, admitted that the company was looking for fresh funds to put its remaining 25 aircrafts back up in the air. Kingfisher is currently in talks with foreign carriers to sell a portion of its stake, according to him.
However, Mallya did not disclose the name of the foreign carriers or the exact stake the ailing airline plans to offload to reduce its debt burden.
"It has been only 10 days since the government announced the entry of foreign direct investment in the Indian aviation sector. Therefore, you can only surmise the level of talks we have held so far," he told reporters.
The Kingfisher Airlines chairman had given guarantees worth Rs 5,904 crore for the carrier's loans and other liabilities in 2011-12, but did not get any commission for the same because of lenders' opposition. While guarantees given by Mallya fell from Rs 6,156 crore in the previous year 2010-11, the guarantees provided by Kingfisher's holding and associate companies rose from Rs 8,863 crore to Rs 8,926 crore in this period.
Mallya had got a commission of Rs 51 crore for these guarantees in 2010-11, but the airline has said payment of such commissions has been withdrawn after directions from the consortium of its lenders.
Shares of Kingfisher Airlines were up almost 9% at Rs 15.70 at the close of trade on Wednesday, on the Bombay Stock Exchange.
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