New Delhi/Mumbai: India’s aviation regulator has begun checking Kingfisher Airlines Ltd aircraft daily before takeoff to ensure they are fit to fly.The Vijay Mallya-promoted airline is passing through a rough patch with about half its fleet grounded and income tax authorities refusing on Thursday to unblock its accounts as it has not paid dues.
Safety concerns: Kingfisher Airlines aircraft at the Mumbai airport. By PTI
“We are checking (Kingfisher’s) fleet every day to ensure operational safety across all the 14 regional offices,” said an official of the Directorate General of Civil Aviation, who did not want to be named.Every day, officers stationed at DGCA’s 14 stations check Kingfisher’s aircraft for scheduled and component maintenance. “This is important to ensure confidence of the passenger and will continue till the economic crunch continues,” this official said. “It’s also a pre-emptive step for safety. We don’t want to be blamed for an incident later.”Director general of civil aviation E.K. Bharat Bhushan has issued a directive in this regard to the regional offices earlier this week, the official said.
Kingfisher chief executive Sanjay Aggarwal has presented a schedule to run 28 aircraft operations. It remains unclear how many aircraft the airline is currently flying.
The income-tax (I-T) department’s freeze on Kingfisher’s accounts continued on Thursday though the carrier sought to get it lifted and proposed a repayment plan for its dues. The tax department froze the airline’s account on 17 February for non-payment of dues. The airline began cancelling several flights citing this.
“We have not accepted the revised proposal of Kingfisher Airlines. We have demanded that the airline clear all dues,” said a senior I-T department official, requesting anonymity. “As of now, the freeze on Kingfisher Airlines continues.”
I-T officials held two meeting on Thursday to examine Kingfisher Airlines’ proposal.
Kingfisher is weighed down by huge debt, overdue payments to its staff, dues to the I-T department and to various airport authorities, and fleet reduction due to non-availability of funds to renew leases, Sunil Sewhani, analyst at brokerage GEPL Capital Pvt. Ltd, said in a 21 February report.
“We expect any drop in fuel prices to substantially improve the operations of the company. However, we remain cautious until any news of debt restructuring is announced,” Sewhani said. “Consequently, we believe the stock is expensive at current valuations and should be avoided.”
Kingfisher Airlines shares rose 1% to close at Rs. 25.30 on Thursday on BSE. The benchmark Sensex fell 0.37%.
The Mumbai-based airline reported a loss of Rs. 444.26 crore in the three months ended December against a year-ago loss of Rs. 253.69 crore.
Sales fell 15.2% to Rs. 1,342.32 crore. Kingfisher, which has never reported a profit since its inception in 2005, had a debt of Rs. 7,500 crore as on 30 September.
It posted a loss of Rs. 1,027 crore on sales of Rs. 6,496 crore in the year ended March 2011.
Time was running out for the carrier, said Kapil Kaul, chief executive, South Asia, at consultancy Centre for Asia Pacific Aviation. “ A Kingfisher bailout is only possible by promoters in UB Group and associates by putting upfront $300 million,” he said. “Then the banks will give the balance $300 million, but it needs one-time decisive capital.” If the funds do not come before 3 March, Kingfisher’s risk profile will be enhanced, he added.
