India's Kingfisher Airlines in turmoil

Shares in India's Kingfisher Airlines closed nearly 10 per cent lower yesterday at a record low after a string of flight cancellations heaped further problems on the debt-ridden carrier. India's second-biggest private airline announced on Tuesday that it was cancelling at least 50 flights a day every day until next Saturday, just weeks after saying it was axing its low-cost service entirely. But the Times of India newspaper said yesterday that cancellations were more widespread and only 269 of Kingfisher's scheduled 418 daily flights operated on Thursday. Shares in the carrier dropped 19.1 per cent to a record low of Rs17.55 (Dh1.28) in early trade on the Bombay Stock Exchange yesterday, recovering to end at Rs19.65, still down 9.45 per cent. Investors exited the stock over fears about its long-term survival, forcing the loss-making airline to deny suggestions that it might be shut down. "The question does not arise," Kingfisher's chief executive Sanjay Aggarwal told the Press Trust of India news agency late Thursday. Analysts agreed, but warned that the airline's predicament was still "very critical" and that only a quick cash infusion and restructuring of operations would revive its fortunes. India's Civil Aviation Minister Vayalar Ravi ruled out a government bailout, but said talks were on to assist Kingfisher and its billionaire owner, drinks magnate Vijay Mallya. "All effort will be taken to solve a crisis in the aviation industry," he told reporters in New Delhi. "We want them [Kingfisher] to fly." A senior civil aviation official, who declined to be named, added that "it is a possibility" that the government might speak to banks about ways to restructure and ease Kingfisher's estimated $1.2-billion debt. India's government is already working on a financial injection to bail out its flagship state-owned carrier, Air India. A Kingfisher spokesman declined to comment on reports of the cancellations or the company's response to the airline regulator, which has asked for an explanation of the cancelled flights.