Kingfisher drops on news of exiting Red

Kingfisher Airlines has slipped in early trades after announcing that it would get out of low-cost segment, Kingfisher Red.

Vijay Mallya-owned Kingfisher Airlines took over Kingfisher Red after acquiring Deccan Aviation during mid-2007. However, Mallya has decided to exit the low-fare segment to take care of the debts of India's second largest airline (in terms of passengers carried). The company has run up a debt of Rs 6,000 crore, accumulated losses of Rs 5,000 crore and pays out an interest of Rs 1,300 crore. which is more than its market capitalisation of Rs 1,232 crore as on Wednesday’s price of Rs 24.70 an equity share on the National Stock Exchange.

The stock has dropped 2.6% to Rs 24.10 in morning trades after opening at 24.55. It has already touched a low of 23.75 - down 4% from the previous close. The counter on the BSE has seen trades of around 2,57,000 shares as against a two-week trading average of 5,46,000 shares.