New Delhi: Shares in Kingfisher Airlines, surged Monday, despite the debt-laden carrier reporting a widening of losses in the June quarter. Kingfisher, which has never made a profit since its founding in 2005, lost Rs 651 crore in April-June, compared with a loss of Rs 264 crore rupees a year earlier.
While results look bad on an annualized basis, there has been some respite on a sequential basis. Kingfisher's losses came down to Rs 651 crore in the June quarter from Rs 1,152 crore in the March quarter as the carrier has drastically curtailed flights and operations.
The stock had fallen 19 per cent last week in anticipation of weak results. Today's gains might be on the back of short covering or value buying.
Kingfisher shares traded 20 per cent higher at Rs 8.87 on the BSE. It was the top traded stock, in terms of volumes, on the broader BSE 500 index.
Shares in all other group companies also traded with strong gains today. United Breweries, the maker of Kingfisher beer, jumped 10 per cent after it beat estimates to report a solid quarter. Sales jumped 28 per cent at Rs 1,220 crore against Rs 950 crore last year, while annualized net profit soared 38 per cent at Rs 99 crore against Rs 71 crore last year. United Breweries shares traded at Rs 49.25 on the BSE at 10.46 a.m.
Kingfisher: No signals of turnaround yet
The fortunes of Kingfisher, saddled with $1.4 billion in debt, hang on its ability to raise funds soon. It needs at least $500 million immediately to keep operating, according to the Centre for Asia Pacific Aviation consultancy.
However, the company has shed no light on any potential funding lifeline.
Kingfisher, controlled by flamboyant liquor baron Vijay Mallya, is the biggest victim of turbulence in the Indian aviation industry, which has struggled under high state taxes on jet fuel, high airport charges, below-cost fares and an uncertain regulatory environment.
State-taxes of up to 30 percent make jet fuel about 50 percent costlier in India than the global average. Fuel constitutes about half of an airline's total costs.
In India, airport charges are also high, and New Delhi airport has been termed the world's costliest by the International Air Transport Association, an industry body that represents more than 80 percent of global air traffic.
To add to those woes, Mallya has failed to pay Kingfisher's pilots or crew for months and has regularly faced employee ire over salaries, leading to cancellations of flights.
It has long hoped that a government proposal to let foreign carriers take a maximum 49 percent stake in domestic airlines will be made law, providing it a potential lifeline. That proposal is stalled by complicated coalition government politics and there is no clarity on whether or when it will be implemented. No foreign airline has publicly shown any interest in picking up a stake in Kingfisher.
Mallya, who is a member of parliament, has said that several local and foreign investors were interested in investing in Kingfisher but no money has materialised.
Indian carriers lost about $2 billion in the financial year that ended in March and are reeling under a combined debt load of $20 billion. Privately held IndiGo was the only airline that made money last year.
However, Kingfisher's woes have proven to be a boon to relatively healthier players like top carrier Jet Airways and No. 2 budget carrier SpiceJet, which posted surprise quarterly profits last week, indicating the worst may be over for them.
(With inputs from Thomson Reuters)
While results look bad on an annualized basis, there has been some respite on a sequential basis. Kingfisher's losses came down to Rs 651 crore in the June quarter from Rs 1,152 crore in the March quarter as the carrier has drastically curtailed flights and operations.
The stock had fallen 19 per cent last week in anticipation of weak results. Today's gains might be on the back of short covering or value buying.
Kingfisher shares traded 20 per cent higher at Rs 8.87 on the BSE. It was the top traded stock, in terms of volumes, on the broader BSE 500 index.
Shares in all other group companies also traded with strong gains today. United Breweries, the maker of Kingfisher beer, jumped 10 per cent after it beat estimates to report a solid quarter. Sales jumped 28 per cent at Rs 1,220 crore against Rs 950 crore last year, while annualized net profit soared 38 per cent at Rs 99 crore against Rs 71 crore last year. United Breweries shares traded at Rs 49.25 on the BSE at 10.46 a.m.
Kingfisher: No signals of turnaround yet
The fortunes of Kingfisher, saddled with $1.4 billion in debt, hang on its ability to raise funds soon. It needs at least $500 million immediately to keep operating, according to the Centre for Asia Pacific Aviation consultancy.
However, the company has shed no light on any potential funding lifeline.
Kingfisher, controlled by flamboyant liquor baron Vijay Mallya, is the biggest victim of turbulence in the Indian aviation industry, which has struggled under high state taxes on jet fuel, high airport charges, below-cost fares and an uncertain regulatory environment.
State-taxes of up to 30 percent make jet fuel about 50 percent costlier in India than the global average. Fuel constitutes about half of an airline's total costs.
In India, airport charges are also high, and New Delhi airport has been termed the world's costliest by the International Air Transport Association, an industry body that represents more than 80 percent of global air traffic.
To add to those woes, Mallya has failed to pay Kingfisher's pilots or crew for months and has regularly faced employee ire over salaries, leading to cancellations of flights.
It has long hoped that a government proposal to let foreign carriers take a maximum 49 percent stake in domestic airlines will be made law, providing it a potential lifeline. That proposal is stalled by complicated coalition government politics and there is no clarity on whether or when it will be implemented. No foreign airline has publicly shown any interest in picking up a stake in Kingfisher.
Mallya, who is a member of parliament, has said that several local and foreign investors were interested in investing in Kingfisher but no money has materialised.
Indian carriers lost about $2 billion in the financial year that ended in March and are reeling under a combined debt load of $20 billion. Privately held IndiGo was the only airline that made money last year.
However, Kingfisher's woes have proven to be a boon to relatively healthier players like top carrier Jet Airways and No. 2 budget carrier SpiceJet, which posted surprise quarterly profits last week, indicating the worst may be over for them.
(With inputs from Thomson Reuters)
