India's Kingfisher Airlines posted its worst-ever quarterly loss on Thursday, as huge cuts in the number of flights compounded the woes of a cash-strapped carrier facing high fuel prices and intense competition for low fares.
Kingfisher, which was India's No. 2 airline until a year ago, has been the biggest victim of turbulence in India's aviation industry, where six main carriers face a total debt load of USD$20 billion and USD$2 billion in annual losses.
It is now the smallest carrier in India by market share.
Shares in the airline have plummeted more than 80 percent since the beginning of 2011, shrinking the airline's market value to just under USD$100 million.
The high-profile airline, which is owned by flamboyant drinks baron Vijay Mallya, lost INR11.5 billion rupees (USD$205 million) in the quarter to end-March, compared with a loss of INR3.6 billion rupees a year earlier.
The carrier blamed losses on high fuel prices, a weak rupee and an "unprecedented, tough operating environment," but said it would return to normal services within 12 months.
"The company has a focused fleet re-induction plan and hopes to be back to full-scale operations in the next 12 months, backed by a recapitalisation plan that the company is actively pursuing and confident of achieving," it said in a statement.
"It's going to be a very, very tough job for the company... If the company promoter brings in sufficient funds, to the tune of INR20 billion - INR30 billion rupees, only then there is a chance that the company comes back on track," a Mumbai-based aviation analyst said.
'Without that, the company will not find a way ahead," the analyst, who did not wish to be identified, said.
National carrier Air India has been forced to cut most of its international routes due to industrial action by its pilots, handing Jet Airways - the country's biggest carrier - an opportunity to increase aggressively its market share in international routes.
Low-fare and mostly domestic carriers such as IndiGo, the only airline making money in India, and Spicejet have also gained market share as Kingfisher and Air India struggle.
Spicejet said on Wednesday that its net loss for the January-March quarter had widened more than four-fold, but it expected lower costs once it imports jet fuel directly.
Kingfisher needs at least USD$500 million immediately to keep flying, according to the Centre for Asia Pacific Aviation, but there has been no sign of funding in the near term.
The company said its net loss for the year to end-March was INR23.3 billion rupees, more than double its loss in the previous fiscal year.
"Until and unless the promoter himself puts in money, investors will not come. If he invests, say, INR2.5 billion rupees, only then investors will get the confidence to invest another INR2.5 billion," said Sharan Lillaney, an aviation analyst with Angel Broking.
India's plans to allow foreign airlines to invest up to 49 percent in local carriers, which Kingfisher has lobbied hard for, has yet to be approved, adding to its funding crisis.
"FDI could probably be the only silver lining. It might get approved now that India needs foreign currency. Looking at the rupee now, there is a chance that it may get approval," Lillaney said.
Mallya has repeatedly insisted that several domestic and international investors are interested in his company, and for months the names of many foreign airlines and local tycoons have been reported as prospective "White Knights", but so far there has been much talk and no money.
If Kingfisher fails to turn the airline around, its banks - which have USD$1.3 billion in loans outstanding - would be left to pick over the carcass in a country that does not have a formal bankruptcy process.
Loans are secured in part by a combination of guarantees by the airline's parent, the UB group, as well as Kingfisher shares, Mallya's personal guarantees, its Mumbai real estate assets and the Kingfisher brand itself, bankers had said.