Kingfisher Airlines to stop international flights

Associated Press
Commuters drive past a stationary aircraft belonging to Kingfisher airlines at the domestic airport in Mumbai, India, Tuesday, March 20, 2012. The severely cash-strapped airlines may now face the risk of cancellation of its flying permit after the Directorate General of Civil Aviation (DGCA) expressed doubts on its ability to maintain a steady schedule with a declining number of operable aircrafts and ongoing problems with pilots leaving the company.(AP Photo/Rafiq Maqbool)
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NEW DELHI (AP) — Debt-laden Kingfisher Airlines said Wednesday it will suspend all international flights from this weekend and prune its Indian services as the government considers canceling its license.

All routes abroad will cease from Sunday through the summer. Kingfisher's chairman and owner, brewery tycoon Vijay Mallya, said the company will operate 170 daily flights within India on 28 aircraft — down sharply from its winter schedule of more than 400 flights using 64 planes.

It was the airline's latest effort to stave off financial collapse. Tax authorities have frozen its bank accounts and caused its suspension this month from the International Air Transport Association's payment clearinghouse that divides revenue from codeshare flights or multileg journeys between several carriers.

"We have decided to suspend our international operations as we are not on IATA platforms," Mallya said after meeting with India's Civil Aviation authority. "So, there is no sense flying abroad."

Kingfisher has been in the red since launching in 2005 and has debt of $1.3 billion. In the quarter that ended in December it posted a $90 million loss.

The airline also has not paid salaries or fuel bills, and had to return several wide-bodied planes to lessors after missing payments. Last year, it shut down its loss-making budget carrier.

The Indian government has threatened to yank Kingfisher's license if it finds its service is unsafe.

"Safety norms also involves financial viability," Civil Aviation Minister Ajit Singh said.

Authorities are "checking on the passenger safety aspect, whether the planes are safe and pilots were in good condition," he said.

The government had also demanded that Kingfisher set a schedule it can manage, after several months of topsy turvy service during which the airline revised its flight plan several times, grounded planes and canceled flights.

Kingfisher is not alone in its financial struggles, however, as five of six Indian carriers posted losses in the last quarter.

India's aviation sector blames high fuel costs and landing tariffs, crushing price wars and currency fluctuations.

It argues that foreign investment is the key to recovery, and is pressing the government to allow them to sell shares to foreign carriers.

Kingfisher in the meantime is searching for new ways to raise capital. "Once it is complete, we will ramp up again," Mallya said.

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