Bangalore, May
31:
Rationalising
of capacity led to drop in passenger revenues for troubled Kingfisher Airlines
during 2011-12.
The airline
announced its plans to rationalise its operations during the last fiscal in
order to contain mounting losses. On the domestic sector, Kingfisher recorded
an operating revenue drop of 14 per cent alongside five per cent reduction in
capacity.
On its international
routes, the company saw five per cent dip in operating revenues amidst six per
cent reduction in capacity.
Towards the end
of the fiscal, Kingfisher Airlines had to cancel its international operations
as IATA suspended it from BSP platform. A press statement from the company said
that the airline, while continuing its “previously-stated ‘holding plan' with a
limited fleet”, is also progressing on its aircraft reconfiguration plans to
contain losses. However, the company has a “focused fleet re-induction plan and
hopes to be back to full-scale operations in the next 12 months”.
Lease rentals
Kingfisher
Airlines believes that this would be possible with its recapitalisation plans
and is confident of achieving it, added the release.
A reduced
capacity has also brought down the company's aircraft lease rentals to about Rs
100 crore (Rs 247.43 crore) during the fourth quarter, while it came down to Rs
868.45 crore (Rs 984 crore) for the full year.
The company
said in its filing to the BSE cited a clause in its agreement with lessors that
the company is to pay lease rentals only in the event of breach of certain
contractual obligations in future.
“The company
has sought extension of time to meet a part of its obligations which were to be
fulfilled by March 31, 2012, which it is hopeful of receiving. No provision is
considered necessary as the Company is confident of meeting the relevant
obligations,” it added.
Use fees
The use fees
(hourly and cyclical utilisation charge) paid in respect of these leased assets
have also been treated as maintenance reserves.
“The company is
taking steps to formalise this understanding with the relevant lessors. In
terms of the company's accounting policy, these use fees are initially included
under loans and advances, and are expensed out to the profit and loss account
of the time of incurrence of major maintenance expenditure/termination of
agreements,” it observed.
http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3477791.ece
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