Cash-strapped Indian airline Kingfisher will suspend international operations to eight overseas cities, including London Heathrow, as well as reducing domestic flights on 10th April.
Earlier this month British Airways announced that it was suspending its codesharing agreement with the airline, but had refused to comment fully on its reasons.
The suspension of these operations are to give Kingfisher Airlines time to come up with a rescue plan.
India’s aviation authorities have decided not to suspend the airline’s licence following a meeting with the owner Vijay Mallya, but are continuing to monitor the situation. However, India’s aviation minister appeared doubtful when he spoke to reporters in New Delhi yesterday: “The problem is in the last two to three months, he’s given so many plans and he’s not adhered to any of them.”
The level of debt run up by the airline is believed to be £900m, and since banks have refused to lend it more money it has been struggling to keep flying. Kingfisher will tackle this by reducing its domestic operation to no more than 125 flights a day, less than half the number in October. Mallya admitted that this was only “a holding plan”.
The news provoked a 5.5% fall in Kingfisher shares, their lowest level since it began trading. This is good news for rival airlines Jet Airways and IndiGo as they increase their market share and pricing power.