Kingfisher Airline's troubles continue to mount/news06012012

Kingfisher Airlines dropped 11% and touched monthly low of Rs18.25 after the State bank of India says the company is an NPA and also DGCA aked the company to come with full safety plan in 3 days.

Deatiled story:

The Kingfisher Airlines account became a non-performing asset for State Bank of India ( SBI) while the aviation regulator gave the airline three days to come back with a detailed plan on financial recovery and safety.

SBI Chairman Pratip Chaudhuri said the Kingfisher Airlines (KFA) account had turned into a non-performing asset ( NPA). “The account became an NPA on December 31, 2011. They are in default,” Chaudhuri said. As a result, the airline has been given 90 days to regularise the account.

SBI, the leader of the consortium of banks that have lent funds to Kingfisher Airlines, has an exposure of Rs1,457.78 crore to the struggling firm. SBI's exposure is the highest among any of the lenders to the airline, followed by IDBI Bank (Rs727.63 crore), Punjab National Bank (Rs710.33 crore), Bank of India (Rs575.27 crore) and Bank of Baroda (Rs537.51 crore).

The private carrier is in a financial mess and struggling to service its loans, which have run up to over Rs6,000 crore.

Kingfisher reported a net loss of Rs469 crore for the July-September quarter of the current fiscal, though its revenues rose by 10.2% to Rs1,528 crore. In the last fiscal ended March 31, 2011, it posted a loss of more than Rs1,000 crore.

Late last year, Kingfisher announced various business rationalisation initiatives, including phasing out of its low-cost Kingfisher Red service and reconfiguration of its fleet.

The airline has been under pressure from its huge debt liability, besides increased expenses associated with fuel costs and operations, and had restructured its loans last year to lower costs.

It is also said to be in talks with banks and some potential investors for fresh funds.
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