Some lessers of Kingfisher Airlines are planning to take back aircraft they had given on lease as the Vijay Mallya-promoted company faces its biggest crisis amid questions over strategy and a nationwide furor over mass cancellation of flights for the third straight day.
The lessers (lenders who arrange long-term leases for companies) have been negotiating with Kingfisher for the past few days after the airline defaulted on payments on some aircraft due to a worsening financial situation, exacerbated in recent months by rising fuel costs and intense price war.
Unable to secure money from lenders or the equity markets and fast running out of cash to pay for fuel supplies, Kingfisher on Thursday continued to cancel flights for the third day. The airline, according to some estimates, is losing Rs 3-4 crore a day, which is approximately Rs 100-120 crore per month.
Travel agents, government officials and Kingfisher executives said over 167 flights have been cancelled since Tuesday. The Director General of Civil Aviation (DGCA) has issued a notice to the airline, demanding an explanation.
Kingfisher has responded by saying the airline is restructuring its operations after deciding to discontinue the low-fare, no-frills business last month. “No shutdown, only ensuring loss minimization by a flight rationalization and enhanced revenue through reconfiguration of aircraft,” Chairman Vijay Mallya told ET.
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