Lenders have already burned their fingers with the 'king of good times' carrier and yet, the government is eager to bailout the debt ridden Kingfisher for the second time
Kingfisher Airlines, which won the Skytrax award for India's best airliner in 2011, is again facing turbulence and instead of landing. There are efforts from certain quarters to keep the debt-ridden airline afloat. According to reports, Aviation Minister Vayalar Ravi indicated that the government might speak to lenders, especially state-owned banks for a possible bailout of the Airlines. Mr Ravi had been quoted as saying that he had spoken with Finance Minister Pranab Mukherjee and Petroleum Minister Jaipal Reddy, after Vijay Mallya, the flamboyant owner of Kingfisher sought government's help.
The question is why the is government eager to help bailout Mr Mallya and his debt-ridden Airlines for the second time, when its own national carrier, Air India is still not out of trouble? About a year ago, 18 lenders agreed to restructure Kingfisher's debt of Rs8,000 crore by cutting interest rates and converting part loans into equity shares. Lenders, including State Bank of India (SBI) and ICICI Bank converted debt of Rs1,400 crore into equities at around 60% premium at Rs64.48 per share to Kingfisher's market price of Rs39.9 a share in April 2011.
Considering Kingfisher's closing price of Rs19.85 per share on Friday the lenders already have lost Rs44.63 per share in the company. And yet, the politically well connected owner of the company is seeking government bailout.
Over the past four days, Kingfisher have grounded over 120 flights forcing the Directorate General of Civil Aviation (DGCA) to issue a show-cause notice to the carrier for not taking its prior permission to curtail its flight schedules. Kingfisher's chief executive Sanjay Agarwal told PTI that the entire exercise is part of its route rationalisation to improve profitability. “We decided to reduce frequency in some of the routes where we had multiple flights like Delhi-Mumbai or low passenger load like Nanded-Mysore,” he said.
According to reports, on Thursday, Kingfisher operated only 64% or 269 flights out of the 418 flights of its winder schedule allocated by the DGCA. Kingfisher’s action has caused immense heartburn to thousands of passengers as following the flight cancellations; they had to pay a premium of 20% to 40% to travel by other airlines. The cancellation of flights and alleged quitting of around 130 pilots from Kingfisher may be the airlines’ way to create some pressure on the government for a bailout package. However, the question remains, why the poor traveller had to suffer time and again even after paying a premium on Kingfisher ticket?The airline has suffered a loss of Rs1,027 crore in 2010-11 and has a mounting debt of Rs7,057.08 crore. Since starting its commercial operations in May 2005, Kingfisher has yet to see profit on annual and total cost basis. (see the table, courtesy Wikipedia)
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take Air India plane for their Joy ride throught the world (God knows whether they are properly billed for by Airlndia
for VIP operations) and still thinking whether to bailout air india or not and see how cancellation of King Fisher flights operation, the Prime Minister (like a spokesman for KF) comes out with a statement calling for helping. This show how corrupt this government is. Moreover when open sky policy was announced, there was no level playing field offered and our
beloved ex civil aviation minister robbed all the lucrative routes, deliberately to facilitate these private carriers and air india was used for evacuvation of indian citizens who have migrated to foriegn countries, for earning their doller income when during crisis. Government instead of bailing out KF, should declare the Airlines Industry as service industry (just like Railways) and save Air India and take a decision not to allow anymore private players in Indian Aviation space. But will they do that is a million doller question?
AIR INDIA SHOULD BE SOLD/PRIVATIZED LOCK, STOCK & BARREL WITHOUT A DAY'S WASTE. WHOEVER OPPOSES SHOULD BE DISPATCHED!
AIR INDIA IS A DISGRACE TO INDIA ITSELF- IN & OUTSIDE OF INDIA
Some years ago Mallya has gold-plated the roof of the sanctum sanctorum of Sabarimala Hill Temple, Kerala. This offering attracted criticism, but the Kerala High Court allowed him to donate 32kg of gold and 1,900kg of copper to gold-plate the temple roof. It reportedly cost him Rs 18 crore.
I am a religious Hindu. However, I think it is sin to do such things in a temple. God doesnt need gold especially from a person who earns money by selling liquor.
It is sadly said that Man proposes but God deposes and unfortunately this happens in the case of the King of Good Times when even God can't help him!
WILL THE GOVERNMENT DO IT????
KF is private and if the banks bought the share , it was a gamble but why is KF not utilising full schedule and why premium on its tickets?
Maybe the banks feel that either KF will revert to earning or maybe sold to another airline.
Capt Gopinath started the budget airline concept and was trying to breakeven. But that was not in the intrest f KF and Jet, who were full fare airline, they pulled a trick and finished the budget concept. Now u only have a AI express which has a fixed fare even in this times. all otheres have jackd up the prices to unbelievable levels (make hay while the devils rules) imagine if there was no check with a PSU airline they would al be looting. Secondly there wont be any flights to 2nd and 3rd tier cities. because they are totally loss making.
It is very easy to say SHut it etc.. ramifications are quite serious.. Railways are now loss making again. can we shut that too?? PSU oil companies are loss making . and reliance is not selling a drop of petrol or diesel to the public. Can you find any petrol pump belonging to the pvt refiners??? regarding the employee ratio. remember they have all their employees in their roles. where as Singapore or a Malaysia airline has them in their subsidy. so they are not reflected in the total numbers.
http://www.reuters.com/article/2011/11/1...
http://www.moneylife.in/article/why-gove...