Kingfisher Airlines narrows annual net loss

UB Group-controlled Kingfisher Airlines has narrowed losses by 38 per cent in 2010-11, to Rs1,027 crore, from Rs1,647 crore in the previous year. Revenues were up 23 per cent, at Rs6,496 crore, on the back of higher demand, stable yields and higher aircraft utilisation.

Kingfisher Airlines capitalized on demand growth in the home markets to achieve a 10 percentage point increase in domestic load factor, which compares favourably with the industry average of 6 percentage points for the same period.

Domestic operations saw a revenue per available seat kilometre (RASK) improvement of 19% whereas the international RASK improved by 43%.

Despite a 15% increase in fuel cost, EBITDA CASK (cost per available seat kilometre) reduced by 2.4%. In the course of the year, the airline implemented initiatives that lowered sales and distribution cost and overhead expenses.

Faced with a tough financial situation, Kingfisher Airlines had to seek special approval from the Reserve Bank of India for a debt recast in December 2010.

The debt recast and better operating performance resulted in net loss as a percentage of total revenue reducing from 31.3 per cent to 15.8 per cent.

As per the terms of the debt restructuring worked out, the airline will have a moratorium of two years for payment of principal and close to Rs900 crore will be converted into equity from its lenders. The rest of the debt of around Rs6,000 crore will be paid over the next few years.

The carrier has also reported an operating profit of Rs140 crore, compared to a loss of Rs690 crore. ''This is an improvement of Rs830 crore. Several cost reduction initiatives and growing maturity of international routes were the major contributors to the improvement,'' a company statement said.