Capital restructuring and better operational matrices have created
positive sentiment for the airline.

After being grounded for a while, the share price of Kingfisher
Airlines has started gearing for a takeoff. While capital
restructuring and equity issuance will lower the huge debt burden of
around Rs 6,000 crore, operational parameters are showing signs of
improvement.

The management mentioned that the company would raise around $250
million from global depository receipts and Rs 500 crore from the
domestic market. The parent will also convert Rs 650 crore worth debt
into preference capital. Overall, the debt burden will be reduced by
around Rs 2,000 crore, which will bring in more functional clarity for
the airline, reckon analysts.

With earnings before interest, depreciation, tax and amortisation
(Ebitda) of Rs 177 crore in the June quarter, domestic Ebitda margins
more than doubled to around 13 per cent from six per cent in the
previous year. The airline was making losses at the operational level
in the corresponding quarter of the previous year.

Revenues jumped around 29 per cent year-on-year in the June quarter.
The operational matrices that were lagging compared to peers,
especially Jet Airways, are catching up now. The critical load factor,
which determines profitability and productivity of an airline, has
also improved.

For domestic routes, it rose to around 81 per cent in the June
quarter, as against 70 per cent a year ago, while it jumped 17 per
cent year-on-year to 77 per cent on international routes. Jet Airways
has a load factor of around 80 per cent for both domestic and
international routes.

On costs, too, there were savings on account of benign fuel prices.
Affiliation with the 'Oneworld' global airline group will give
Kingfisher access to better packages. This is expected to stabilise
international operations, which still report operating losses.
However, oil price shock and slump in air travel may stall the take
off.

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