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tayara mechanici


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This should keep Mallya busy, DEBT.
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Kingfisher Air runs up Rs 942 cr debt



Raghuvir Badrinath / Bangalore July 26, 2006









Kingfisher Airlines, which recently completed the first year of its operations, has run up a debt of close to Rs 950 crore.

 

The company, during the first quarter-ended June 30, 2006, has raised debt totalling Rs 327 crore, taking the entire outstanding to Rs 942 crore.

 

According to UB Holdings, the holding firm for Kingfisher Airlines, it has executed guarantees in favour to banks aggregating Rs 327 crore on behalf of Kingfisher Airlines Ltd (KFA) during the quarter, taking the debt up to Rs 942 crore cumulatively to-date. UB Holdings presently hold 83.35 per cent in this firm.

 

The company had to resort to this kind of debt as its efforts to raise private equity to the tune of $150 million has not materialised. Plans for an IPO, according to the company officials, is at present on the backburner.

 

However, this has not deterred the company to go in for a massive expansion of its fleet and its routes. According to recent announcements, Kingfisher Airlines is on an overdrive placing $270 million worth of orders for aircraft.

 

Kingfisher Airlines has placed orders for another 15 ATR 72-500 aircraft. The company has also placed orders for five Airbus A380s, five A350s and five A330s. The deliveries of A330s are expected to begin in 2007 while the A380s and A350s arrive in 2010 and 2012 respectively.

 

On a more immediate basis during 2006, the company is taking on board two more ATRs, besides four more Airbus aircraft to add to its present fleet of 11 Airbus and four ATRs.

 

According to the company, it has 13 operational aircraft connecting 15 cities in India through 72 flights in a day. The company also claims that its average load factor is around 70 per cent.

 

Kingfisher Airlines' fleet comprises of a mix of leasing and buying from Debis Air, Babcock, Singapore Air Leasing and Airbus.

 

The company is also in touch with European Credit Agency for soft loans to fund acquisition of aircraft.

Now what are his options, IMO with the wages he pays to the poached crew and the designer interior he has in his aircrafts my guess is his breakeven figure is above 80%. Given that he states he'e clocking 70% loads that is another area of concern.


The aircraft orders were a means to ease the debt and cash flow i.e. sale and lease back. Fine, 2 issues here first the A330 are coming in 2007, he doesn't have rights to fly intl as yet, second how many leasing co out there that would buy 5xA330 in an exceedingly uncertain global market i.e. ME crisis, Fuel prices & Interest rate rises (nice one, antra (start) of a song), with possibility of melt down and once again lowering of lease rentals. 


He is slowly getting into the CATCH 22.


In all fairness to him he has got a vision and is moving toward positioning his brand there. Among all the pvt airlines he is the greatest threat to the likes of SQ, BA, VS & EK. If the govt allows the pvt player to fly abroad soon, IMO these pvts are going to dent the fortunes of the intl airlines mentioned above. 



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Nimish


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According to the company, it has 13 operational aircraft connecting 15 cities in India through 72 flights in a day. The company also claims that its average load factor is around 70 per cent.

Wow - 70% is really low - compared with 0S's 96% LF!

I guess IT can always lease their new 330s to IC, since IC is perpetually on the look out for wide bodies, that it can never find in the market

On a more serious note, it does not seem like a very pleasant situation for IT. I hope they can start making some serious money soon, otherwise that will be the end of all dreams of 380s in India!

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tayara mechanici


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Nimish wrote:

 I guess IT can always lease their new 330s to IC, since IC is perpetually on the look out for wide bodies, that it can never find in the market
Makes good business sense, and this way the govt can offload IC to mallya, atleast one half of the AI/IA problem would be solved, in case the merger doesn't materialise.

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HAWK21M


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1st couple of years Losses are always likely.But if the trend continues it'll be bad news.


regds


MEL



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the_380


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Nimish wrote:

 I guess IT can always lease their new 330s to IC, since IC is perpetually on the look out for wide bodies,
Thats what is gonna happen i guess maybe even A345HGWs

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tayara mechanici


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the_380 wrote:

 maybe even A345HGWs

Thats not a bad idea, they can deploy the A345 head to head with AI B772LR to US and get rid of the other half of the AI / IA............


the_380, you are undoubtedly very clever



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VABBy


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 So finally VMjee is also feeling the heat. I thought he had some serious cash available. Then why worry about the Debt. I hope loads improve and he brings the prices of tkts a bit down esp his Biz class . 10K for biz class with no alcohol is absolutely ridiculous...



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the_380


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tayara mechanici wrote:

 Thats not a bad idea, they can deploy the A345 head to head with AI B772LR to US and get rid of the other half of the AI / IA............ the_380, you are undoubtedly very clever

Hmmm...maybe u should have done ur lessons well at school


Neways thanx for the compliments



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the_380


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I dont think Mallya will have his problems for long maybe just some more time but i m sure he will emerge as a big competition on global aviation markets

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JumboJet


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Some rumor in the industry that Mallaya was the only one with deep pockets

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HAWK21M


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If VJM finds the Going hot.He'll just shut down the Airlines.His back up booze business is still intact.


regds


MEL



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the_380


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Thats a very strong possibilty very much possible if he wants only money from share markets

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