Unfair to write Kingfisher’s epitaph: Mallya

Mumbai : Kingfisher Airlines chairman Vijay Mallya Tuesday came out strongly in defence of the carrier, refuting media reports that the airline was on verge of collapse and said it was unfair to write its “epitaph” while others in the aviation business were also losing money.

“It is not fair to write us off, do not write our epitaph. This is a very difficult and tough operating environment in which every airline is losing money,” Mallya said while addressing the media here.

The airline, which owes about Rs.6,500 crore to banks alone, and had run up huge dues to oil marketing companies (OMCs) as well said it had started streamlining operations. Mallya again reiterated that the carrier would not fly on unprofitable routes — a decision which sparked off recent fears about the airline’s viability.

“It was a commercially prudent decision. We can not afford to fly on routes which are loss-making.”

The airline has not posted any profit since its launch five years ago, and reported a net loss of Rs.1,027 crore in the last fiscal. Its net loss in the second quarter rose to Rs.468 crore in the second quarter ended Sep 30.

The UB Group chairman said Kingfisher had brought down the dues to the OMCs and given bank guarantees to cover bills from Hindustan Petroleum Corp and that all other vendors would continue to provide supplies and services.

“We have applied officially to the ministry of commerce for direct import of fuel, and if we import fuel directly for our own use we become an actual user, and therefore, we don’t pay sales tax,” Mallya said while laying out some measures to turn around the carrier.

Fuel costs account for over 50 percent of the operating cost, which gets increased due to the sales tax charged by various state governments, Mallya added.

The Kingfisher chairman again denied that he had asked the government for any bailout package.

“I have not asked the government or the banks for any bailout package. But am very grateful to the Prime Minister on the statement that the government would find solutions to the problems of Kingfisher.”

Mallya, who batted for allowing foreign investment into the airlines business, avoided direct queries on whether Kingfisher had been approached by Indian or foreign investors for a stake.

“I do not see any reasons why the foreign direct investment (FDI) should be banned or not permitted.”

The UB Group will now take care of the airline’s immediate financial needs and has infused around Rs.150 crore in the last 30 days.

“In the last 30 days we have brought in Rs.150 crore in the airlines. The UB group is keeping pace with the requirements of the airline,” Ravi Nedungadi, chief financial officer, UB group said.

“Banks have been extremely supportive with the airline. There is a process they have to follow,” Nedungadi said.

The airline has curtailed 40 flights every day since Nov 9 — a move, the company said, was taken to rationalise route plans and improve yields.

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