It has happened just a day after a report said the country’s aviation regulator had concerns about safety standards. State Bank of India, the company’s largest creditor, declared its exposure to the air-carrier a non-performing asset when Kingfisher Airlines has not paid lending funds of Rs 1,457.78 crore to Bank.
The Times of India said that an audit by the Directorate General of Civil Aviation (DGCA) suggested Kingfisher’s licence may be under threat as its financial predicament could impinge on safety.
However in turn back, Kingfisher strongly denied that safety was compromised and the DGCA later said, “There is no threat of cancellation, although it has asked for rectification measures.”
After a slump start in BSE, the airline ran down 10.76 percent to 18.25 rupees, after some point being recovered position; it was still down more than 6.0 percent within an hour of the opening bell.
Kingfisher the Bangalore-based carrier is facing a cash-flow crisis due to non payment of maintenance fees. During September, in favour of more lucrative full-fare routes, axed unprofitable domestic routes, the airline surfaced its low-cost Kingfisher Red service and has grounded 15 aircraft caused by soaring fuel costs and high local sales taxes as well as a domestic price war.
The Bangalore-based carrier, which has seen its market share of passengers slump in recent months.
Shares of Kingfisher Airlines today plunged by over 11% in morning trade after After a weak start, the shares fell further to an early low of Rs 18.15, down 11.24% over previous close, on the NSE.
Meanwhile the private carrier is covered under a financial crisis and battling to service its loans, which have run up to over Rs 6,000 crore.
SBI Chairman Pratip Chaudhuri recently said, “Kingfisher is a NPA (non-performing asset) for us. They are in default.”