Will stop Kingfisher Red operations
Bangalore: Cash-strapped Kingfisher Airlines would stop operations of Kingfisher Red withdrawing from the low-cost carrier segment, Chairman Vijay Mallya said Wednesday.
"We are doing away with Kingfisher Red because we don`t intend to compete in the low-cost segment," Mallya told reporters here in the south Indian city after an annual general meeting of Kingfisher, which was launched in 2006 but has never reported profit.
"We believe there are more than enough guests who prefer to travel the full-service Kingfisher Class, and that shows through in our own performance where the load factors in Kingfisher Class are more than in Kingfisher Red," he said.
Mallya said the margins of Kingfisher Class are better than Kingfisher Red "as the yields are better. And reconfiguration of aircraft have already started and should be completed over the next few months. All is not doom and gloom as people like to report".
He said the shareholders Wednesday unanimously approved the Rs 2,000 crore rights issue.
Shareholders had previously approved GDR issue as well. But the GDR couldn`t be launched due to various external environmental factors such as the high crude oil price regime, Mallya said.
"But there are always opportunities that show up and we are obviously examining all options available to us including the rights issue that was approved today," he said.
Mallya said the aviation industry in India is suffering from high oil prices, high ad valorem sales tax, the depreciation of the rupee and this affects all airlines that are operating.
If the state governments reduce their ad valorem tax and substitute it with a flat rate of tax, then it would be a huge relief to the whole industry and that would immediately show through in Kingfisher`s financial performance.