Fresh woes for Kingfisher as it cuts flights

Reuters: Cash-strapped Kingfisher Airlines said it has been forced to reduce operations due to "unexpected events" but promised to resume normal services within the next four days.

The company, controlled by liquor baron Vijay Mallya, has cancelled 32 flights out of the 240 it operates each day, hit by problems including bird strikes which forced aircrafts out of service, it said in a statement late on Saturday.

India's airline companies, on course to lose $3 billion for the year ending in March, have struggled with low fares, high jet fuel prices and massive competition. Five out of six major carriers in India are loss-making. Kingfisher, which on Thursday reported a loss of 4.44 billion rupees in the fiscal third quarter that ended in December, said its bank accounts were attached by the tax authorities as it scrambles for cash infusion.

"However, this has happened in the past not just to us but also to Air India AIN.UL. We have resolved issues before and will do so again," the company said in the statement.

Kingfisher has so far failed in efforts to attract fresh equity. Its banks own about a quarter of its shares and State Bank of India (SBI.NS), its lead bank, refuses to lend more without an equity injection.

"We have had a good meeting with our consortium of banks who have accepted, in principle, the viability study prepared by SBI Capital markets and independent consultants," the statement said. "Our request for additional working capital has been acknowledged by the consortium and is subject to individual bank approvals."

The government is expected to soon allow foreign carriers to take a 49 percent stake in local airlines, a move Kingfisher has long called for, which may prove to be the saviour of the debt-laden industry.