This month of August is going tough for Indian Manufacturers and Indian Suppliers Kingfisher Airlines has reported a 15% increase Y-o-Y in its losses at 263.54 crore for the April-June quarter as high fuel cost continues to erode margins. The second largest private sector airline said the benefit of re-structuring its debt earlier this year has been completely offset by 40% rise in its fuel cost at Rs 845 crore.
Kingfisher has adopted a new accounting method that allows costs on major repairs and maintenance to be amortised over the incremental life of the asset. Had the company not adopted this method, its loss after tax for the quarter would have been higher by Rs. 26.23 crore, it said. Sales saw an improvement of 15% at Rs 1,911 crore led by a 10% increase in its traffic domestically. “Even though the capacity growth at 19% slightly outpaced the demand growth, Kingfisher Airlines effectively capitalized on its strengths to achieve a 4 percentage points increase in domestic load factor. In the same period, industry load factors experienced a decline of 2 percentage points,” the airline said in a statement. In a note to investors, the airline said it has incurred substantial losses and its net worth has eroded.
“However, having regard to improvement in the economic sentiment, rationalization measures adopted by the company, fleet recovery and the implementation of the debt recast package with the lenders and promoters including conversion of debt into share capital, these interim financial statements have been prepared on the basis that the company is a going concern and that no adjustments are required to the carrying value of assets and liabilities,” it said. Shares of the company were trading down 2.19% at RS 32. 20 on the Bombay Stock Exchange.