Bangalore: Kingfisher Airlines on Wednesday said that it will quit its low cost aviation business, Kingfisher Red. Vijay Mallya, Chairman, Kingfisher Airlines said that the segment was too competitive and there are enough passengers for a full service operation.
"Kingfisher Airlines is working with a consortium of banks to further reduce interest costs and raise working capital as the carrier looks to restructure its fleet by selling and leasing back some of its aircraft to lower debt," Mallya said.
The cash strapped airline has never reported profits since its launch in 2006. In the last quarter, the airline had reported losses of Rs. 263.54 crore against losses of Rs. 187 crore in the corresponding quarter of last year.
Meanwhile, Mallaya also outlined plans to reduce debt and raise capital. The company has huge debt levels, which currently stands at Rs. 6,000 crore. He said the airline was working with a consortium of banks to further reduce interest costs and raise working capital.
The airline's auditors had said in the company's annual report for the fiscal year that ended March 31, that it needs capital infusion to remain viable. The auditors B.K. Ramadhyani & Co also noted, that the airline's financial statements had "been prepared on a going concern basis, notwithstanding the fact that its net worth is completely eroded."
The airline also plans to convert part of its rupee loans into low-cost forex loans based on existing cash flows, he said. Kingfisher had planned to raise $250-$350 million through an issue of global depositary receipts in January, but no deal has been forthcoming.