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Auditors raise concerns over SpiceJet's financial health: reports
Auditors has reportedly raised concern over the SpiceJet's financial health, according to reports.
Reports stated that the accumulated loss of the airline to the tune of Rs. 10.78bn as on December 31, 2011, has eroded the company's net worth and doubts had been raised on the carrier's ability to continue as a going concern.
Spicejet promoters said they had infused additional equity of Rs.1.31bn and they also rubbished all concerns.
Aviation stocks fly as GoM permits direct ATF import
Aviation shares like Kingfisher Airlines, Jet Airways and Spicejet rallied on Tuesday after a Group of Minister (GoM) recommended allowing domestic carriers to directly import jet fuel.The GoM suggestion will need an approval from the Union Cabinet, which is likely to take up the proposal soon.
Importing the jet fuel would allow Indian airlines to save on hefty sales tax imposed by local governments."Companies will be allowed to import ATF directly for their use. This also has to go to the Cabinet," Union Civil Aviation Minister Ajit Singh said after the GoM meeting today.
Fuel costs are the biggest cost overhead for an Indian airline company. Domestic carriers pay sales tax in the range of 4-28% on ATF, which accounts for 40-50% of the operational cost.Separately, the GoM approved a financial restructuring package for debt-ridden national carrier Air India.The GoM is headed by Finance Minister Pranab Mukherjee.
Spicejet Q3 net loss shrinks
Spicejet Ltd. Q3 FY12 net loss stood at Rs 390mn versus Rs 2.45bn net loss reported in the previous quarter.
Revenues for the reporting quarter stood at Rs 11.76bn versus Rs 7.66bn in the corresponding quarter a year earlier.
High fuel prices coupled with an unprecedented depreciation in the Indian Rupee during the December quarter, made the operating conditions extremely challenging for all Indian carriers. However, for another quarter SpiceJet was able to successfully grow passenger traffic by 29%, outperforming the domestic industry passenger growth of around 16%.
Aircraft fuel expenses were 90% higher than the same period last year and Fuel Cost as a proportion constituted 50% of the total revenue in the current quarter as compared to 37% in the comparable quarter for the previous year. Increased cost of Crude Oil plus 24% tax on ATF is continuing to impact the Indian civil aviation sector very adversely.
In Focus Stories
Thomas Cook to start process for sale of India biz
Thomas Cook Group PLC (TCG) stated that "it is launching a formal sale process for its 77.1 per cent shareholding in Thomas Cook (India) Limited (TCIL)," India's largest integrated travel and travel related financial services company. "Thomas Cook has received a number of unsolicited informal expressions of interest from third parties to acquire its stake in TCIL and, as a result, has decided to formalise the process."
The announcement was made by Thomas Cook PLC to its shareholders at its AGM on February 8, 2012.
Thomas Cook (India) Ltd (TCIL), a public limited company listed on the National Stock Exchange and Bombay Stock Exchange since 1983, is an independent entity, and has no financial or operational dependencies on the parent.
CRISIL has recently reaffirmed Thomas Cook (India) Limited, with the 'CRISIL A1+" for the Rs 1500 million Commercial Paper and the Rs 2365 million Short term loan and Bank Guarantee programmes. TCIL has also retained the CRISIL AA-'rating for the Rs. 2185 million cash credit and long term programme.
Madhavan Menon, Managing Director, Thomas Cook (India) Ltd said, Thomas Cook Group's decision to divest its majority stake in Thomas Cook (India) Ltd will have no impact on TCIL's financial position or operational performance as it is financially and operationally independent of TCG. CRISIL's reafflrmation of TCIL's rating is a confirmation of its commercial stability and financial independence as a standalone entity."
Domestic News
Kingfisher in talks with Reliance Industries: reports
Cash-strapped private airline Kingfisher is in talks with Reliance Industries to use the oil and gas major's infrastructure and logistics support to transport imported jet fuel from ports to airports, according to reports.
Reliance Industries reportedly said that the company have been approached by airlines to provide them services for handling ATF on their behalf at the airports.
The discussions are in the preliminary stage, and modalities are yet to be finalised,says report.
There are reports that Kingfisher is finalising the plan for direct import of ATF.
GoM clears fresh debt recast for Air India
The Group of Ministers (GoM) on Tuesday cleared a fresh debt restructuring package for the struggling national carrier Air India and allowed it to float bonds worth Rs 75bn.
“Air India’s financial restructuring package has been approved by the group and bonds will be floated for Air India. The final approval will come from the Cabinet,” Civil Aviation Minister Ajit Singh said after the GoM meeting today.
Air India has accumulated losses of over Rs 200bn and makes monthly loss of ~Rs 5bn.
Kingfisher Airlines’ oneworld implementation put on hold
Kingfisher Airlines and oneworld agreed to put the airline’s entry into the alliance on hold to give it time to strengthen its financial position.Its implementation into oneworld had been planned for Friday, 10 February.
oneworld CEO Bruce Ashby said: “These are turbulent times for the airline industry in India and many other parts of the world. We have been working closely with Kingfisher Airlines over the past months and it has become increasingly clear recently that the airline needs more time to resolve the financial issues it is confronting before it can be welcomed into oneworld.
“We wish it well during this process and will work with Kingfisher Airlines with the aim of setting a new joining date once it is through this current period of turbulence.”
Kingfisher Airlines Chairman Vijay Mallya added: "In light of the many priorities centred around Kingfisher Airlines’ recapitalisation efforts, we felt it prudent to defer our entry into the alliance for a little while. This will allow us the opportunity to focus on the issues at hand and we look forward to being part of the oneworld alliance very shortly."
AAI threatens to encash Kingfisher cheques worth Rs. 1.19bn: reports
Air India SATS wins ‘Air Cargo Terminal Operator of the Year’ award
International News
Building a more competitive European aviation sector: IATA
The International Air Transport Association (IATA) urged European policymakers to focus aviation efforts on measures to shore-up the competitiveness of Europe’s aviation sector. “Safety and security must always come first. But at this critical time for European economies it is important that policies focus on measures that support economic growth and job creation, enhance competitiveness and support sustainable development,” said Tony Tyler, IATA’s Director General and CEO.
Tyler also urged policymakers to work with industry on win-win solutions. “There are numerous areas of common interest between what is good for the industry and what is good for Europe,” said Tyler. He noted that such an approach could help avoid “unintended consequences” of regulation. “At present, the general direction is on ‘restricting and taxing’ aviation. Instead of ‘enabling’ policies, they seem focused on ‘disabling’—an unintended consequence that imposes a big cost on European airlines’ competitiveness,” said Tyler.
Gulf airlines not interested in KFA stake: reports
Two major Gulf Arab carriers Etihad Airways and Qatar Airways reportedly said that they have no interest in acquiring stake in struggling Kingfisher Airlines, according to reports. Reports stated that Kingfisher was in early talks with Qatar Airways about a possible stake in the company.
Etihad's chief executive James Hogan also said that that they too had no interest in the Indian carrier. He declined to elaborate.
Kingfisher, controlled by liquor baron Vijay Mallya, is in talks with potential investors, says report.
Boeing delivers first 747-8 and 777 Freighters to Korean Air
Boeing and Korean Air celebrated delivery of the airline's first 747-8 and 777 Freighters. With the milestone delivery, Korean Air becomes the first airline in the world to operate both the 747-8 and 777 Freighters. "We are very proud to become the first airline in the world to have the combined strengths of these two freighters in its fleet," said Yang Ho Cho, chairman of Korean Air. "Our cargo fleet is being improved by these fuel-saving planes. They can help reduce carbon emissions by 17% and this supports our goal to be a responsible citizen of the world."
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