Inefficiently-handled Kingfisher Airlines would be to do little with the recent succour of Rs60 crore from banks. This help provided by banks would not resolve the issue at hand: non-payment of salary of employees.
It is perceived that the company has not paid its employees for seven months. An analysis of employee expenses of the airline suggests that the average employee expense in the last eight and twelve quarters are over Rs100 crore.
Hence, it is very unlikely that the company would be able to assuage the negative sentiment, which built-up in its employees, due to its sheer lack of commitment to sustain the operations.
At present, the company has very few options left to revive its operations. It is estimated that it is losing close to Rs8 crore every day due to suspension of operations. With the company planning to suspend its operations till October 7, it means seven days of suspension of operations. This amounts to a loss of over Rs55 crore for seven days.
Since the company has already cut down on its flights-it operates less than 100 flights at present and 10 aircraft from its peak period (2008) of 570 flights and 78 aircraft, it is fairly obvious that there is little scope that the company would make enough revenues to meet even its working capital requirements and sustain its operations.
Naturally, the airline's future is in peril. Adding to its woes is its high debt of close to Rs8000 crore. It has exhausted most options of collateral. Even the Reserve Bank of India (RBI) has asked banks not to consider Kingfisher Airlines' brand as a collateral since it is intangible.
Having lost its market share due to its poor commitment to its business from close to 20% a year ago to 3.2% in August this year, there seems very slim chances that even a foreign airline company would evince investment interest in the company.
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