(Updates with comment from analyst in fourth paragraph.)
Nov. 28 (Bloomberg) -- Kingfisher Airlines Ltd., the Indian carrier that cut flights amid a cash shortage, fell the most in more than a week in Mumbai trading after a government official said the aviation ministry is scrutinizing its finances.
The company’s shares slumped as much as 6.8 percent, the most since Nov. 18 in intraday trading, to 25.25 rupees. It changed hands at 26.60 rupees at 11:52 a.m. in Mumbai. Jet Airways (India) Ltd., and SpiceJet Ltd. also dropped. All the three stocks have plunged at least 60 percent this year.
Kingfisher stopped flying 12 of its 27 ATR planes, prompting authorities to consider taking back some airport slots, the official said Nov. 25, declining to be identified because of department rules. Chiefs of Indian carriers met Prime Minister Manmohan Singh the next day as they sought assistance to stem industrywide losses caused by fuel costs and a price war.
“It’s not a hidden thing that the company is fighting very hard to raise capital,” said Sharan Lillaney, an analyst at Angel Broking Ltd. In Mumbai. “Doing an audit will not give you any other result.”
The ministry is reviewing Kingfisher’s accounts to determine whether the airline has the financial strength to pay for spares and aircraft services, the official said. The carrier, based in Bangalore, has pared daily services to 300 from 340 and is seeking new loans after losses widened.
Prakash Mirpuri, a spokesman for Kingfisher, didn’t immediately respond to e-mailed questions. The carrier is returning two planes it leased from AerCap Holdings NV after the company “could not agree on mutually acceptable extension terms,” he said in a statement on Nov. 24.
Kingfisher as well as Jet Airways, the nation’s largest carrier, and SpiceJet, India’s only listed low-cost airline, owed money to state-owned fuel suppliers in the quarter ended Sept. 30, oil minister S. Jaipal Reddy told parliament Nov. 24.
Private airlines have blamed fuel costs and low fares for their troubles. The price of jet kerosene, the biggest expense for carriers, increased about 31 percent this year in Mumbai, according to Indian Oil Corp.’s website. Taxes on the fuel average about 25 percent.
Kingfisher also defaulted on payments to airports and is paying cash every day to use the facilities, a civil aviation ministry official, who refused to be identified citing government policy, said last week.
--Editors: Vipin Nair, Frank Longid
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