Kingfisher cancellations extended till March 2012

First it was supposed to be till November 19 and then till December 15 and now till March 2012. The cancellation of flights by Kingfisher Airlines is growing by the day.

The carrier, loaded by debt of as much as Rs 7,000 crore (Rs 70 billion) on a negative net worth, is trying to reconfigure its fleet of 35 Airbus aircraft to fit more seats in the economy class.

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Vijay Mallya, chairman, said this would enable them to increase seats equivalent to an Airbus 320 aircraft without having to go in for an additional one.

"However, the ground reality is a whole lot different. The airline is cancelling more flights than earlier envisaged," a senior official of Mallya's UB Group told Business Standard.

"We are in active discussions with a host of bankers and lessors of aircraft to reduce our outflow of cash generation towards loans we have taken and this is stifling us. We have to curtail flights."

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Kingfisher Airlines has been saying that of its 340 daily flights, around 50 would be cancelled on a daily basis until the reconfiguration was complete.

However, this may go up to as much as 75 flights a day, industry players indicated.

The airline is maintaining that the move to reconfigure the fleet would require up to three planes to be out of service over the next three months at any one time.

"It will reduce the number of fleet configurations from seven to three, improving operational flexibility. This initiative will add more seats to the fleet, improving revenue production of each aircraft," Sanjay Aggarwal, CEO, had said.

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According to some companies in the MRO (maintenance, repair & overhaul) industry, the reconfiguration Kingfisher is doing requires a maximum of four days, once the seats are procured.

"Kingfisher has been procuring seats from Snecma and Recaro and, ideally, for an entire shipset for an A320, it will cost around $300,000.

If you are attempting what Kingfisher is trying in not changing the entire configuration, but only increasing the number of seats, it will cost at least $100,000 per Airbus aircraft, including the costs of seats and reconfiguration expenses," an MRO player told Business Standard without wishing to be named.

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Kingfisher's 35 aircraft from comprise A-330s, A-321s, A-320s and A-319s from the Airbus family.

He added that credits for procuring seats were available in the market, but given Kingfisher's troubles, the airline may have to punch above its weight, indicating the reconfiguration of seats may not be the sole reason for such large-scale cancellation of flights.