Domestic airfares soar 10-30% on disruption in Kingfisher service
The Government has asked airlines to submit details of their financial position, extent of debt and working capital requirements in order to try and work out a bailout package in consultation with the Finance Ministry and banks.
A Working Group, under the chairmanship of the Civil Aviation Secretary, has asked CMDs of all seven domestic scheduled airlines to submit the data by this month.
This comes even as banks gave the nod for a Rs 18,000-crore debt rejig plan for Air India and also agreed to provide fresh cash credit of Rs 2,200 crore.
Domestic airlines had approached the Government seeking help to reduce their debt burden and work out a sustainable business model. They had also wanted to ensure that the volatility in the rupee and increasing price of aviation turbine fuel, a key cost component, does not make their operations unviable.
What the industry is said to be keen on is that the Government steps in to ensure that fuel credit be made available without seeking additional bank guarantees, or that the oil companies extend the present credit limits applicable to various airlines.
“About two months ago an airline which had a bank guarantee of about Rs 800 crore could easily ensure that it got uninterrupted fuel for about 100 days. What has happened since is that, thanks to the global spike in fuel prices and fall in the rupee, the Rs 800-crore bank guarantee fetches it ATF for only, say, 50-55 days.
“The airlines are keen that the oil be provided with unsecured bank guarantee or unsecured credit from oil companies,” sources said when asked why the request from airlines. The airlines may have a point. All the three listed airlines — Jet Airways, Kingfisher Airlines and SpiceJet — reported net losses in the quarter ended December 31, 2011, largely on account of increases in oil prices.
AIR INDIA DEBT
The Maharajas' Rs 18,000-crore debt restructuring plan was not only approved by its lenders on Friday, but they also agreed to provide fresh cash credit of Rs 2,200 crore.
According to PTI, official figures show the carrier has outstanding loans and dues of Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 crore is vendor dues besides an accumulated loss of Rs 20,320 crore.
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