Kingfisher Airlines tanks almost 5%, hits lower circuit limit

MUMBAI: Following a suspension of license by the DGCA on Saturday, shares in Kingfisher Airlines Ltd dropped 4.8 per cent on Monday. Kingfisher's licence was suspended after it failed to address the regulator's concerns about its operations, forcing the debt-laden carrier to stop taking bookings.

The scrip of the financially-troubled company was down 4.8 per cent and hit the lower circuit limit of Rs 10.90 soon after the opening trade on the BSE. Similar was the trend at the NSE, where the stock plunged 4.82 per cent to Rs 10.85.

Meanwhile, selling pressure was also seen in other UB group stocks. United Breweries was trading 0.90 per cent lower, while United Breweries Holdings Ltd fell by 2.86 per cent, UB Engineering (1.03 pc), McDowell Holdings Ltd (3.03 pc) and United Spirits (2.81 pc).

The Directorate General of Civil Aviation (DGCA) suspended the Scheduled Operator Permit of Kingfisher Airlines till further orders, Civil Aviation Ministry officials said.

Suspension of flying licence implies an immediate halt to all bookings on the entire Kingfisher network as well as through travel agents, the officials said.

The liquor baron Vijay Mallya-owned carrier has been saddled with a loss of Rs 8,000 crore and a debt burden of another over Rs 7,524 crore, a large part of which it has not serviced since January. The airline currently has only 10 operational aircraft compared to 66 a year ago.

Asked why the license was suspended, the officials said the government did not want a situation where the airline, which was on cash-and-carry mode for almost all service providers, re-starts operations and then keeps flying in fits and starts, as has been happening since last year-end.

The airline, under a lockout since October one and resultant suspension of entire operations, had yesterday sought more time to respond to the DGCA's show-cause notice but did not give any timeline by which it would do so.

The DGCA had issued the show-cause notice on October 5 to the crisis-ridden carrier asking why its flying licence should not be suspended or cancelled as it was not adhering to its flight schedule and "abruptly cancelling its flights time and again during the last 10 months", causing great inconvenience to the travelling public.

The aviation regulator had given the airline 15 days to respond, the deadline for which also expired.

The airline has suffered losses of Rs 1,609 crore in 2008-09, Rs 1,647 crore in 2009-10, Rs 1,027 crore in 2010-11 and Rs 732 crore in 2011-12.

Elaborating on the suspension of licence, the Civil Aviation Ministry officials said the flying permit was suspended under the Civil Aviation Rules and provisions of the Aircraft Act.

The permit would remain suspended till such time that Kingfisher submits "a concrete and reliable plan" to relaunch its scheduled operation "to the satisfaction of the DGCA".