Kingfisher Airlines Expects New Recorded Net Profit as Growing Passenger Traffic and Increase Airfares

Kingfisher Airlines Ltd., India’s second-biggest airline by market share, expects to post its first net profit this financial year thanks to growing passenger traffic and an increase in air fares, the chief financial officer of its parent group said Tuesday.

Kingfisher has been making losses since its inception in 2005 because of an ill-timed aggressive expansion that included ordering Airbus A380s, the world’s biggest commercial jet, and a merger with budget carrier Air Deccan. This came just before the global economic crisis and hurt the company as interest and fuel costs rose while passenger traffic fell.

A turnaround in the industry is now improving the performance of airlines in India as passenger traffic has increased, giving them the opportunity to increase ticket prices.

“We have been able to increasingly pass on higher fuel costs to passengers and that is a positive sign,” Ravi Nedungadi of UB Group said.

His comment came after the airline, controlled by billionaire Vijay Mallya, late Monday narrowed its net loss for the last fiscal year ended March 31 to 10.27 billion rupees ($227 million) from 16.47 billion rupees the previous year.

Kingfisher benefited from lower lease rentals and salary costs in the past year, while higher passenger traffic drove its sales up 23% to 64.96 billion rupees from 52.71 billion rupees.

The company said its net loss would have been bigger by 251.8 million rupees, if not for an accounting standard change through which it amortized costs on aircraft maintenance and engineering.

Kingfisher’s passenger load factors grew to 81% from 72% in the previous year. It carried 12 million passengers, up 9%, while revenue per passenger increased 10% to 4,666 rupees.

Kingfisher paid 9.84 billion rupees as aircraft lease rentals in the past year, a decline of 10% due to some changes in lease contracts that allowed the carrier to push its payments forward until the end of the lease agreement, it said.

The airline’s employee costs declined 2% to 6.76 billion rupees.

“We exchanged some expatriate pilots with Indians, which led to a cut in the wage bill,” Mr. Nedungadi said.

Kingfisher also “marginally” cut the size of its workforce, he said, but didn’t elaborate.

Kingfisher spent 22.74 billion rupees to buy jet fuel in the past year, an increase of 26%. Fuel comprises the bulk of an airline’s expenditure in India.

Airline Woes Prompts Wings Financial State Charter Vote

Wings Financial Federal Credit Union has asked its members to vote on converting to a state-chartered credit union because of concerns it has with a significant drop in employment in the air transportation industry.
Read more

Seven U.S. Airlines Sued Federal Aviation Administration

Seven U.S. airlines have sued the U.S. Federal Aviation Administration, claiming the agency broke its own rules and may have compromised flight safety when it set new standards for pilot rest times last year without input from the carriers. Read more