Debt-ridden Kingfisher Airlines is not shutting down, nor has it sought a bailout from the Government, the Chairman and promoter of the airline, Mr Vijay Mallya, said.
The airline, which cancelled several flights in recent weeks, will now focus on high-end business, Mr Mallya said, as the market watched for signals from him on how the airline planned to emerge from the financial turbulence it was facing. The company's stock closed at Rs 21.85 per share, up 0.5 per cent on the Bombay Stock Exchange on Tuesday.
“Flights got cancelled because we could not afford to fly, we could have handled flight cancellations better, but to write the epitaph of the airline is not fair,” he told a packed media conference on Tuesday.
The company was not seeking any bailout, Mr Mallya said. “I have not asked the government or the banks for any bailout package,” he added. “We have only asked the banks for additional working capital,” Mr Mallya said, adding, “This does not mean that, like Air India, we have asked the government to dip into the governmental coffers and use taxpayers' money.”
The company has been approached by strategic investors, he said, without divulging details, when asked by the media.
Phasing-out Kingfisher Red, its no-frills service, was a strategic decision of the company to not compete in the low-cost segment. “Phasing out Kingfisher Red doesn't mean we are shutting down… We have a loyal customer base, better yields on the full-service Kingfisher Class, so it's a financially prudent decision to focus on that segment.”
Reiterating that the company cannot afford to fly heavily loss-making routes, he added, that the company not handed over an advantage to Jet Airways by closing Kingfisher Red.
There will be no large-scale layoffs, but the company is looking at cutting costs, he said. “Kingfisher has started reconfiguration and it (reconfiguration) will give us incremental revenue generation opportunities,” he explained.
Mr Mallya said that Kingfisher was undertaking several steps to reduce interest cost burden, raise working capital and streamline the existing fleet order. It has applied to the Government to directly import fuel, he said.
The aviation industry, he said, was struggling with high fuel costs.
“If we will import fuel directly, then we won't pay sales tax.” Mr Mallya said the fuel costs account for over 50 per cent of the operating cost, which gets increased due to the sales tax charged by various State governments.
He said reports that Kingfisher was struggling to pay its fuel costs were unfounded and that it was fulfilling its repayment criteria with oil firms.
“We are in compliance and that's why we operate,” he added. Mr Mallya, further said, the airline has reduced its dues to the three state-run oil marketing companies (OMCs).
“We have fully repaid IOC (Indian Oil Corporation) and BPCL (Bharat Petroleum Corporation Ltd). As far as HPCL (Hindustan Petroleum Corporation Ltd) is concerned, from over Rs 600 crore of unsecured credit... we have given bank guarantees and our outstanding to them is now down to Rs 40 crore.”