Kingfisher Airlines hires US firm to revamp ops

Hopes to improve its performance and turn profitable

Confronted by growing losses, Kingfisher Airlines, part of the UB Group, the brewery and liquor giant, has hired Seabury Aviation & Aerospace, a US-based company, to advise on its restructure and improve its performance.

The move comes when Kingfisher remains the only listed airline in India to have made losses in the third quarter of the current financial year. The other two listed carriers, SpiceJet and Jet Airways, both turned in profits in the quarter, after losses in the first two quarters.
 

QUARTERLY LOG Net loss/profit of India’s three listed airlines
Airlines	Q1	Q2	Q3
Kingfisher	-242	-418	-420
Jet	-225	-406	106
SpiceJet	26	-101	109
Figures in Rs/cr

“The airline has hired a US-based advisory firm after the management realised that running an airline is different from the brewery business and losses could not be controlled,” said a source in the know, who did not want to be identified.

“The firm’s primary job will be to find loopholes in the airline’s functioning and management and suggest ways to fix these,” added the source.

An airline spokesperson confirmed the development. “Kingfisher Airlines has engaged the services of Seabury Aviation & Aerospace, a specialised advisory firm. Amongst other services, Seabury provides expertise to the aviation and aerospace industries in the areas of strategy, business planning, network development and fleet optimisation,” an email reply from the airline said.

According to information on its website, Seabury has led or been a significant participant in seven of the 10 largest financial or operational turnarounds of airlines around the globe in the past 15 years and had advised over 225 clients worldwide in the aerospace sector.

The spokesperson said Seabury’s engagement would be for a brief period. “The firm has been hired to assist us in sustaining long-term profitability by further strengthening the operational and financial performance of the company, so that we are well poised to ride the upturn and capitalise on this opportunity using the best global practices,” he added.

Kingfisher Airlines operates 350 flights a day, connecting 70 cities, including seven international destinations. The airline has 67 aircraft—39 Airbus and 28 ATRs— and commands a market share of 20.8 per cent.

In 2008, Jet Airways and Kingfisher Airlines had announced an alliance to reduce operational cost, which has not yet materialised. Under the plan, the two airlines were to support each other in eight specific areas—code-sharing flights, interline agreements, joint fuel management to reduce fuel expenses, common ground-handling, cross-selling of flight inventories, network rationalisation, cross-utilisation of crews on similar aircraft types and reciprocity in frequent flier programmes.

The Vijay Mallya-promoted airline, which posted a loss of Rs 1,608 crore in the last financial year, has also increased its accumulated losses in the current financial year to Rs 1,075 crore from Rs 1,054 crore in the last financial year.