Thaindian News

Bangalore, Sept 28 (IANS) Flamboyant business tycoon Vijay Mallya, who is grounding his low-cost airline operations, told his investors Wednesday that his high-profile Kingfisher Airline was declared the “Best Indian Airline” at the Business Traveller Awards 2011 in London Monday.

“Kingfisher received the ‘Best Indian Airline’ award at the Business Traveller Awards 2011 in London September 26. It’s also the country’s single largest airline with about 20 percent share in the aviation market, where demand remains strong,” Mallya told the shareholders at the company’s 16th annual general meeting here.

Though the cash-strapped private carrier is yet to make profits since its launch in 2005, it currently operates about 370 flights daily to 60 destinations, including eight cities overseas and carries around 12 million passengers annually.

“We delivered a better financial performance during the first quarter (April-June) of this fiscal (2011-12) than other listed Indian carriers. On domestic operations, we reported an Ebitda (earnings before interest, depreciation and amortisation) margin of 15.4 percent as against 6.4 percent and 7.2 percent reported by our competitors,” Mallya asserted.

The airline offers three classes of service — Kingfisher First, Kingfisher Class Economy and Kingfisher Red no-frills economy, with the last named being now dropped.

On average, the load factor in Kingfisher First is about 50 percent. The capacity is being reduced on dual class Airbus aircraft and introduced on single class aircraft.

“Over the past six months, Kingfisher Class (economy) has generated higher yields and seat factors than the no-frills Kingfisher Red class of service,” Mallya recalled.

Following re-configuration of the airline’s Airbus aircraft, economy seats across the Airbus fleet will increase by 10 percent and the higher capacity will be offered across the board as a Kingfisher Class full service product. Consequently, the Kingfisher Red no-frills class of service will be phased out.

The airline’s ATR aircraft will operate in a single configuration as a Kingfisher Class service product. Advance reservations made in the Kingfisher Red will be honoured, as the reconfiguration will take about four months to complete.

“Judging from actual past performance, higher yields and load factors and increase in overall revenue are expected,” Mallya pointed out.

The loss-making airline implemented a debt recast package last fiscal (2010-11) after bank loans of Rs.1,300 crore and funds to the tune of Rs.745 crore from promoters were converted into share capital.

The lending banks have also lowered the interest rate on the recast loans to 11 percent and extended the repayment term to nine years.

“We are working with the consortium of banks to reduce the interest cost. Some of the initiatives include sale and lease-back of some aircraft and other assets to reduce loans and converting part of the rupee loans into low-cost forex loans based on forex cash flows,” Mallya told the shareholders.

The consortium of banks is appraising the enhanced working capital request to cater to the strong growth and higher fuel costs.