Tuesday, 20 December 2011

Kingfisher Airlines grounds 15 planes as liquidity evaporates

Kingfisher Airlines have grounded 15 of its planes in a further sign of trouble for the airline. The latest report comes after it was reported that 100 of its pilots have quit the airline and creditors such as airports and oil companies have stopped extending credit to the airline.

The chairman of State Bank of India, Pratip Choudhuri which leads the consortium of Kingfisher lenders has said that 'We are trying to help Kingfisher'. Despite the trouble at Kingfisher, there are reports that the airline will receive lending of 2.5 billion rupees from Indian conglomerate Sahara and that this would assist greatly with Kingfisher's short term financial position.

If this was the case, Kingfisher may try and eliminate all competition in the Indian market as only one of India's six airlines currently makes a profit due to agressive price competition.

It is certainly a risky gamble by Sahara if they were to do this, as Kingfisher has never made a profit under the leadership of its flamboyant owner Vijay Mallya. Kingfishers share price has dropped by 67% since the start of 2010.