Excessive indulgence can lead you to bankruptcy, for a man worth a billion bucks Vijay Mallya has sought a bailout from government over cash-crunch, UB group owned- Kingfisher Airlines is facing. While civil aviation minister Vayalar Ravi is upbeat about it, BJP has come out strongly against any such move. There are however indications of the government assisting Kingfishers by asking banks to provide it loan at low interest rates.
Situation is so grim that since October, its employees did not even receive their salaries and thus many refused to show up for work leading to cancellation of flights. Cancellation of flights is also due to the need of cutting down expenses by the airlines in wake of lack of funds.
Reportedly the airlines has a massive debt of over Rs. 7057 crore and it faced a loss of Rs. 1027 crore in the fiscal year 2010-2011.In April, ICICI and SBI converted their debt to Kingfishers in equity at approximately 5% each. Effects of financial crunch can already be seen on Kingfishers fortune as today its stocks plummeted 19% at an all time low to slightly go up in the later part of the day.
Kingfishers is the second largest air carrier, market share wise and started out in 2005 with Air Deccan joining in 2008.It has never made profit and since its inception has considered various options for funding.
Analysts have started predicting a steep fall in price of the shares and are wary of any outlook, which considers Kingfishers as a profitable investment.