New blow for India's Kingfisher as shares face suspension

GMT 17:56 2014 Saturday ,08 November

Arab Today, arab today New blow for India's Kingfisher as shares face suspension

A Kingfisher Airlines booking counter at Indira Gandhi International Airport
New Delhi - AFP

Shares of India's grounded Kingfisher Airlines face suspension, stock exchanges have announced, hammering another nail in the coffin of the carrier founded by self-crowned "King of Good Times" tycoon Vijay Mallya.
The heavily indebted airline, once India's second-largest by passenger share, has never turned a profit since its launch in 2005.
The company has defaulted on payments to banks, airports and leasing firms and employees, and owners of its planes have taken many of them back.
The shares will be suspended at the start of next month unless Kingfisher declares long-overdue financial results, stock market authorities said.
Trading in shares of Mallya Group Company UB Engineering will also be suspended.
"Trading in the securities of the companies would be suspended with effect from December 1, 2014," the Bombay Stock Exchange said in a website notice Saturday.
"The suspension will continue till such time the company complies (with financial reporting requirements)," the exchange said. The National Stock Exchange made a similar announcement.
Kingfisher said in August it would "take steps" to publish its results for last year and for the first financial quarter to June, but added operating with "skeletal staff" made balance-sheet preparation tough.
The full-service Kingfisher, which boasted it treated flyers as "guests", never returned to the skies after pilots went on strike in 2012 over unpaid wages.
- Court challenge -
While India's passenger aviation market is one of world's fastest-growing, analysts say Kingfisher was a casualty of cut-throat fare wars in the congested sector where most carriers are losing money.
The share suspension warning comes two months after state-run United Bank of India labelled Mallya a "wilful defaulter" over the airline -- a term the central bank defines as someone failing to pay debts even when they have the capacity.
Mallya objected to the tag "as a wrongful decision", and a court hearing on his challenge is expected Monday in the eastern city of Kolkata, according to a company statement.
The court's decision is important as the defaulter label could prevent Mallya from getting new loans and might mean he has to quit corporate directorships.
Mallya, known for his lavish party lifestyle, made his fortune through an inherited liquor business and branched out with Kingfisher Airlines, named after his top-selling beer which is an Indian household name.
Kingfisher shares were trading on the Bombay Stock Exchange at 1.94 rupees Friday, down from a 2007 high of 335 rupees.
Mallya has fallen out of India's billionaire's league due to Kingfisher's woes with Forbes pegging his fortune at $750 million, less than half a 2007 peak of $1.6 billion.
He is still chairman of United Spirits, a key source of his riches, but has sold a large chunk to Diageo and handed over management control to the British beverage giant.
He also remains co-owner and managing director of the Sahara Force India Formula 1 team.
Mallya's firms can avoid the trading suspensions if they if they report their results and pay unspecified fines by November 25, the bourses said.
There was no immediate comment on the suspensions from Mallya, who tweeted Friday it had been "quite a testing day" at the Brazilian Grand Prix where he said the India Formula 1 team exercised an option to keep Mexican driver Sergio Perez for 2015.

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