In a challenging quarter for the aviation industry, Vijay Mallya-promoted Kingfisher Airlines has announced a doubling of its losses for the September 2011 quarter at Rs.469 crore against a loss of Rs.231 crore in the same period last year.

The operating revenue for the quarter was up 7 per cent at Rs.1,528 crore against Rs.1,383 crore. According to the company, the momentum has continued with demand growth of 20 per cent during the quarter. “However, it has been matched by a capacity growth of 20 per cent, putting pressure on yields for the industry. This has been coupled with a more than 35 per cent rise in fuel price as compared to the same quarter last year.”

While Kingfisher's passenger load factor was higher than the industry's at 77 per cent (72 per cent for industry), it reported an operating loss of Rs.271 crore against an operating profit of Rs.55 crore in the same period last year. This was reflected on the operating margin too with the company reporting a negative margin of 16.7 per cent against a positive 3.6 per cent in the year-ago period.

Its domestic operations saw a 5 per cent increase in revenues at Rs.1,145 crore but it reported an operating loss of Rs.195 crore against an operating profit of Rs.108 crore. Its international operations reported an operating loss of Rs.76 crore against a loss of Rs.53 crore on a 11 per cent higher operating revenue of Rs.383 crore (Rs.345 crore).

Addressing the media, Vijay Mallya, Chairman, Kingfisher Airlines, said that the environment in the Indian aviation sector was a high cost one. “It is highly taxed and restrictive for investments and this is affecting viability of the industry. The industry is in serious trouble and we are not worse off than anyone else and are better off than several others but the government should address these systemic issues.”

On international expansion plans, Mr. Mallya said, “There is no need for international expansion as we plan to join the One-World Alliance next quarter where members including Cathay Pacific, American Airlines and British Airways use partners' routes to shore up networks. However, we are going to improve utilisation on our A-320 and A-321 by flying to neighbouring countries and within India.”

Mr. Mallya also said that Airbus had confirmed the rescheduling of delivery of the A-380 aircraft ordered by Kingfisher as “the environment is not conducive for the next five years for A-380 operations in India.” Kingfisher has ordered for five A-320s this year with the first of them coming in December but all may not be delivered this year.

During the period, the airline has undertaken several projects to improve its operational performance and also initiated a large-scale aircraft reconfiguration at minimal cost on the existing fleet.

According to Sanjay Agarwal, CEO, Kingfisher Airlines, “we are in discussions with various banks to reduce interest cost without further restructuring and have decided to focus on a single segment of full service airline. We have also dropped unprofitable flights in an effort to consolidate our network. We appointed SBI Caps to confirm the long-term viability of the company.”