NEW DELHI India's debt-ridden Kingfisher Airlines Ltd put on a brave face on Thursday after announcing a record loss for the second quarter, saying a recovery plan is in the works and its grounded jets will take to the skies soon.
The airline, which has struggled to pay its staff for most of the year and has not flown for over a month due to protests and safety concerns, has never turned a profit in its eight-year history. According to one estimate, it is saddled with roughly $2.5 billion in debt.
The figures got even worse on Thursday for a company that has been on life support for months.
Second-quarter results showed a loss of 7.54 billion rupees, compared with a loss of 4.69 billion rupees a year earlier. Revenue declined 87 percent to 2 billion rupees.
Despite the company's pledge on Thursday to produce a comprehensive recovery plan, some analysts doubt that what was once India's second-largest carrier will fly again.
Creditors have set a November 30 deadline for Kingfisher to bring in fresh equity or an investor, the chairman of State Bank of India (SBI.NS), its lead lender, told Reuters. He did not say what would happen if the demand was not met.
"Options? It is already bankrupt, I don't think there is any option," said a Mumbai-based aviation analyst with a local brokerage.
"If a promoter can put in money, then possibly the company can be revived, but we are talking about very large amounts of money, 30-40 billion rupees," said the analyst, who did not wish to be identified because he no longer covers the company.
A Kingfisher spokesman refused to comment.
Kingfisher has been scrambling without success to find fresh investment. No global airline has publicly expressed an interest in buying a stake.
The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion.
The carrier, controlled by liquor tycoon Vijay Mallya, said on Thursday it was preparing a comprehensive plan to re-start operations that would be shared with the airline regulator and bankers. Kingfisher did not say when it would be available and gave no details.
"The airline is in discussion with various stakeholders to ensure that there are no future disruptions. Kingfisher Airlines expects to resume operations in the near future," it said in a statement issued at around 1 a.m. local time.
This week, a top government official said India would not renew the airline's licence if it failed to provide a turnaround plan by the end of December.
Kingfisher's licence was suspended only after months of cancelled flights, staff walkouts, unpaid bills and angry creditors, prompting criticism that authorities were going easy on the politically powerful Mallya, who is a member of parliament.
SBI chairman Pratip Chaudhuri said on Wednesday that Kingfisher needs to raise or commit at least $1 billion by November 30. It was not clear what action bankers would take if Kingfisher misses that deadline.
Big state-run Indian banks often support companies in their distress and liquidation is extremely rare. At several sessions of a World Economic Forum summit this week in New Delhi, many panellists questioned banks' high exposure to struggling firms.
"We are slightly disappointed with the pace at which their capital-raising plan is going on. We have made it very clear to the company that the company has no justification or no room for debt. They have to give equity," Chaudhuri told reporters at the event on Wednesday.
"We would like to see some tangible evidence, some forward movement. Unfortunately till date, we have not seen anything very significant," he said.
UK drinks giant Diageo Plc (DGE.L) is in talks to pick up a stake in Mallya's United Spirits Ltd (UNSP.NS) and media reports have said a deal could be announced as early as this week, which could give the former billionaire some cash to put into Kingfisher.
But Mallya, who is no longer a billionaire on the latest Forbes list, told Reuters last month that he would not sell his "family silver" to save Kingfisher.
A UB group spokesman declined to comment on Thursday.
Kingfisher shares have fallen around 40 percent this year and were trading at 12.70 rupees on Thursday, a tiny fraction of their all-time peak above 334 rupees in late 2007. (Additional reporting by Aditi Shah in MUMBAI; Editing by Jeremy Laurence)