Kingfisher Airlines: 10 developments on potential endgame

Plunging share price, regulatory issues, independent directors leaving the company are all signs of an endgame at Vijay Mallya’s Kingfisher Airlines.

Here are ten latest developments:

• Kingfisher Airlines will pitch for scaled-down operations later today, operating with a mere 15-16 planes, sources told NDTV on Tuesday. Liquor baron Vijay Mallya, the airline’s key promoter, is scheduled to meet with the Director General of Civil Aviation Bharat Bhushan on Tuesday. He will make a detailed presentation outlining his carrier’s next steps that includes grounding all international flights, sources said.

• Civil Aviation Minister Ajit Singh told NDTV today that the airline has not adhered to plans crucial for its operations. “If DGCA gives a report that safety cannot be assured certainly we will take action. We can cancel their license if it comes to that,” he said. The Directorate General of Civil Aviation, Bharat Bhushan, also told NDTV that despite several warnings on different fronts, the airline has not been able to correct its mistakes.

• Vijay Mallya has been summoned to meet the Directorate General of Civil Aviation (DGCA) chief E K Bharat Bhushan today. Mallya said that he would explain the situation to him. A final DGCA recommendation to the government on Kingfisher is expected after the meeting. (Kingfisher Chairman to meet aviation regulator amid doubts over survival)

• The DGCA has sought an explanation from Mr Mallya on how he plans to revive his airline, which is operating a depleted strength of its scheduled flights, leaving many passengers in the lurch every day with unannounced cancellations. Today's meeting is expected to decide whether the airline’s troubles have cruised past a point of no return. A final DGCA recommendation to the government on Kingfisher is expected after the meeting. 

• Kingfisher share price plunged 12 per cent in early morning trade. At 12.30 pm, it was down 7 per cent. Kotak Securities, a Mumbai-based stockbroking firm, said that the company is unlikely to restore operations. “In view of the cash-flow problems being faced by the airline, it is unlikely that the airline would be able to restore operations,” the brokerage said in a note this morning to its clients.

• The company’s market share is now below 5 per cent at 100 flights a day. “A fleet of 16 aircraft means that market share of the airline would have slipped to mid-single digit from 12 per cent in January 2012,” Kotak Securities adds.

• Kingfisher's finances are in a shambles and its inability to pay airport dues has prompted the Airports Authority of India (AAI) to ask for advance payment for each aircraft that takes to the air. The service tax department has threatened to take the airlines to court over dues not being paid. (CBEC threatens to move court against Kingfisher)

• Kingfisher Airlines was hit with a regulatory challenge after the last of its independent directors quit amid growing concerns about the struggling carrier's survival. Anil Kumar Ganguly resigned from the company's board of directors due to ill health over the past few months that prevented him attending normal activities, Kingfisher Airlines said on Monday. The latest resignation comes less than a week after another member, Vijay Amritraj, quit the board. The company had cited an increase in Mr Amritraj's travel schedule and other commitments for the resignation.

KFA's last independent director quits board

• Mr Ganguly's resignation had left Kingfisher without an independent director on its board, which, analysts said, violates regulatory norms for listed companies and that the airline will have to bring some independent directors at the earliest to ensure its operations are not impacted. The company is currently left with three board members - Vijay Mallya, vice-chairman Subhash Gupte and the carrier's parent UB Group's chief financial officer Ravi Nedungadi, according to the company website.

• Kingfisher, which has a debt of $1.3 billion, is facing near-collapse as banks have so far refused to lend it more for day-to-day operation and massive cutback in flights have reduced revenues, leaving the carrier with little cash to pay its employees, airports and tax authorities. The carrier, controlled by flamboyant liquor baron Vijay Mallya, has almost halved its daily flights from the scheduled 200 after some pilots refused to report for work and a suspension by global industry body IATA from its settlement system restricted bookings through overseas agents. (Kingfisher owes Rs 2.6 billion to Airports Authority of India)