(Updates with share prices in fifth paragraph.)
Nov. 25 (Bloomberg) -- India’s Aviation Ministry is scrutinizing Kingfisher Airlines Ltd.’s finances after the company grounded some aircraft, a government official said.
The airline has stopped flying 12 of its 27 ATR planes, the official said, declining to be identified because of department rules. The approval to Kingfisher to buy Airbus SAS’s A380 planes has also lapsed, the official said.
The audit to review the viability of Kingfisher’s services will help the government decide on repossessing slots allotted to the carrier, backed by billionaire Vijay Mallya, the official said. The Bangalore-based carrier pared daily services to 300 from 340 and is in talks with banks for new loans amid a cash shortage.
Prakash Mirpuri, a spokesman for Kingfisher, didn’t answer two calls to his mobile phone.
Kingfisher gained 7.5 percent to 27.1 rupees at close in Mumbai. The stock has fallen 59 percent this year.
Kingfisher, Jet Airways (India) Ltd., the nation’s largest carrier, and SpiceJet Ltd., the 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 yesterday. Kingfisher also defaulted on payments to airports, a civil aviation ministry official, who refused to be identified citing government policy, said yesterday.
Kingfisher is purchasing fuel from Reliance Industries Ltd. on credit for 30 days, the government official said today.
Tushar Pania, a Mumbai-based spokesman at Reliance, didn’t immediately respond to e-mailed questions.
Prime Minister Manmohan Singh is meeting chiefs of Indian airline companies tomorrow in New Delhi to discuss industry issues, Aviation Minister Vayalar Ravi said in an interview today.
Private carriers 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.
--With assistance from Siddharth Philip in Mumbai.Editors: Abhay Singh, Jay Shankar
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