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| Kingfisher Airlines maintains to contain losses as passenger volumes grew during Q3 |
| BS Reporter / Mumbai Jan 21, 2010, 16:38 IST |
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 Kingfisher Airlines, India's second largest private airline company by revenue, has managed to stem its deepening losses during the third quarter of ongoing fiscal as passengers flying on domestic flights increased by almost 31 per cent as compared to corresponding quarter of last fiscal.
The company, owned by alcohol beverages major UB Group, has posted a 2 per cent increase in net loss to Rs 420 crore for the third quarter. The airline, owned by flamboyant billionaire Vijay Mallya, has posted a 5 per cent decline in total income to Rs 1,370 crore.
The company has managed to stem the flight into further losses as it cut capacity by 17 per cent and posted its highest ever seat factor of 80.2 per cent during December 2009. Kingfisher has added that the ATF (aviation turbine fuel) prices remained an unknown factor and it rose by 20 per cent during the past year, in turn which led to higher payout of taxes. Company officials further added that they had to set aside almost Rs 101 crore, which is for an non-recurring exceptional item.
Kingfisher Airlines, which has a debt of around Rs 6,000 crore with a leverage of around 15 times, is in the market to raise around Rs 1,000 crore in the near future either through a GDR or a rights issue.
The company has said it has managed to stem its operating losses to Rs 77 crore during the third quarter as against a loss of Rs 297 crore during the corresponding previous period. “We have reduced the cost per seat by 6 per cent and drove efficiencies further to derive 7 per cent more revenue per seat,” the official added.
“We would have been operationally positive but for the Rs 80 crore cost for aircraft grounded due to technical reasons and which since has been redeployed,” a company official said adding that its domestic operations are indeed operationally positive at Rs 11 crore as against a loss of Rs 122 crore.
“The major drag of losses has been from our international network, which is taking time to get established,” the official detailed. International operations started an year ago, accounts for less for 10 per cent of overall revenues for Kingfisher and has posted an EBIDTA loss of Rs 89 crore.
In addition to the parameter of EBIDTA, airline companies assess their performance on EBIDTAR (earnings before interest, depreciation, tax, amortisation and rentals) as rentals on the aircraft they fly constitute a major portion of cash outflow. “In this parameter, we are positive at Rs 185 crore, three times increase over corresponding previous period,” the official detailed.
Kingfisher Airlines officials noted that they were able to reduce lease costs by more than 25 per cent through redelivery of non-operational aircrafts and cut personnel costs by more than 20 per cent through replacing high cost expats. “Going forward, we plan to reduce Engineering costs by 10-15 per cent by induction of new key vendor and put in place systems for targeted reduction in fuel consumption,” he added.
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