Kingfisher Airlines shares plunge after mass cancellations of flights

Shares of troubled carrier Kingfisher Airlines plunged over 15 per cent in early trade Tuesday over mass cancellations of flights.

Kingfisher stocks traded 13.5 per cent lower at Rs 23 on the Bombay Stock Exchange at 0917 hours. The BSE Sensex was up nearly 40 points at 18,329.

Shares of other domestic carriers, SpiceJet (6 per cent) and Jet Airways (2.7 per cent) traded with big gains.

Kingfisher Airlines' CEO Sanjay Agarwal and other top officials will appear before the aviation regulator, the Director General of Civil Aviation or DGCA today to explain the large-scale disruption of operations and the reasons behind them.

On Monday, the airline cancelled 30 flights; half its flights from major metros were cancelled or delayed on Sunday. Sources have told NDTV that Kingfisher is operating only 16 aircraft, down from 64. After Kolkata and the North East stations were shut down, the next domestic centre likely to shut down is Hyderabad.

Internationally, flight operations to Bangkok, Dhaka and Kathmandu have been shut. Colombo, sources say, will be shut down shortly. Of all Kingfisher Airlines international services, only the London flight is presently operating.

Meanwhile, Kingfisher chief Vijay Mallya has apologised to fliers affected by its sudden flight cancellations. Speaking to NDTV, the airline baron admitted that Income Tax authorities had frozen the airlines bank accounts.

"We tried to reach as many as possible, we tried to make alternative bookings, refunds," Mr Mallya told NDTV.

Kingfisher reported losses of Rs 444 crore in the third quarter of this year - up from Rs 254 crore a year ago. Kingfisher's current debt is close to $1.3 billion or Rs 7,057.08 crore. 

It has been lobbying hard with the government to allow foreign airlines to buy into Indian carriers, a proposal the government is now trying to push through as the country's biggest airlines show bleeding balance sheets.

"We are in dialogue with the tax authorities. We have pointed out to them that this drastic action of freezing bank accounts causes huge public inconvenience. Apart from the fact that if our flights get disrupted on a continued basis, then our revenue gets affected," Mr Mallya added.  

A group of 18 banks, led by the State of Bank of India (SBI), that have lent to Kingfisher met on Friday to discuss the carrier's financial state and sources said Kingfisher hoped the banks would provide it with some working capital soon. There is no official word from either the lending banks or the airline on this yet.