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FIIs desert Kingfisher Airlines

The combined loss of the three listed Indian carriers touched Rs 1,878 crore in the first half of 2011-12

Mihir Mishra  |  New Delhi 

Kingfisher Airlines promoter Vijay Mallya might have pegged its revival to foreign money, but foreign institutional investors (FIIs) are deserting the debt-ridden carrier.

FIIs reduced their holdings in Kingfisher to 0.5 per cent in the December quarter, from 2.11 per cent in the previous quarter, according to Bombay Stock Exchange (BSE) data.

However, Mumbai-based Jet Airways, India’s largest carrier in terms of passenger carriage, saw an increase in FII stake at 5.42 per cent, compared to 4.67 per cent in the three months to September.

In case of Sun Group-promoted SpiceJet, FII stake fell from 6.17 per cent in the September quarter to 3.81 per cent in the three months through December.

The fall was huge because of an increase in promoters’ holding in the company. Promoters’ holding increased to 43.59 per cent from 38.60 per cent.

Despite the fact that the air passenger growth in India is one of the highest in the world, the sector struggled with losses and debt in 2011.

The combined loss of the three listed Indian carriers, Jet, Kingfisher and SpiceJet, in the first half of 2011-12 touched Rs 1,878 crore.

Jet reported a loss of Rs 101 crore for the third quarter. The other two listed carriers are yet to announce their third-quarter numbers.

Rising costs due to high crude oil prices and depreciating rupee are the main reasons behind the losses.

The high cost of jet fuel is largely because of high levies on the aviation turbine fuel and high airport charges, especially after private players started operating them.

The average tax on jet fuel in India is 24 per cent, second only to Bangladesh (at 27 per cent) in the world, making the fuel account half the operating cost. Also, jet fuel prices have increased by 40 per cent in the past year.

Among the listed carriers, Kingfisher’s financials are in the worst shape and the carrier has never made profit. Analysts say the problems of Kingfisher are obvious and investors are deserting the airline.

“Anyone who can take out his investments from Kingfisher is pulling out from it. SpiceJet, however, has seen a decline because of the increase in promoters’ shareholding,” said a Mumbai-based analyst, who did not want to be identified.

First Published: Sat, February 04 2012. 00:41 IST