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Mallya gives Rs59b guarantee for Kingfisher debt

MUMBAI — Tycoon Vijay Mallya gave Rs59 billion ($1.1 billion) worth of guarantees last year to his Kingfisher Airlines as the Indian carrier struggles with losses and a cash shortage.

Mallya didn’t take any commission for the guarantees in the year ended in March 31, after creditors asked the carrier to withdraw some of the earlier fees, according to Kingfisher’s annual report. In the previous year, the billionaire had taken a commission of 
Rs509 million for providing a guarantee of Rs62 billion.

Kingfisher’s market share has slumped to sixth from second as it grounded planes and pared two-third of services in a bid to cut costs amid wider losses. The airline’s debt climbed 29 per cent to Rs91 billion last year, according to the report.

“The Indian airline industry is currently exposed to one of the toughest operating environments and is expected to struggle with profitability pressures,” Kingfisher said in the report. The carrier will have a “phased and pragmatic approach” to adding back capacity, it said.

Kingfisher jumped as much as 10.4 per cent, the most since August 13, to Rs10.10 in Mumbai, and changed hands at Rs9.70 at 1:49pm, up six per cent. The stock has slumped 63 per cent in the past year.

The carrier’s holding and associate firms gave guarantees of 89.2 billion last year, compared with Rs88.6 billion a year earlier. No commission was paid to them either.

The number of employees at the carrier fell to 5,696 last year from 7,317 in the previous 12 month period. Earlier this year, the carrier had asked some of its workers to stay at home.

Kingfisher’s loss in the year ended in March widened to Rs23.3 billion from Rs10.3 billion a year earlier, according to data compiled by Bloomberg. The airline has been trying to raise funds since at least November. It needs $600 million in the next two months, CAPA Centre for Aviation, an industry consultant, said last month.