Kingfisher Airlines' losses mounted in the third quarter, taking the total loss to $240 million this fiscal year, as the ailing Indian carrier was squeezed by high fuel costs, a weaker rupee and fierce competition.
Cash-strapped Kingfisher, controlled by liquor baron Vijay Mallya, has become a byword for the debt-laden Indian airline industry savaged by rising fuel bills, dwindling cash and a stark lack of financing options.
"The company has incurred substantial losses and its networth has been eroded," Kingfisher said in a statement.
"Steep depreciation of the Indian rupee coupled with consistently high crude oil prices has led to a challenging quarter for the Indian aviation industry," the company added.
The company is around a quarter-owned by banks and its top lender State Bank of India has refused to add to loans it considers non-performing.
Kingfisher is in talks with distressed-debt experts but there are no signs of a guardian angel equity injection that executives have long promised. An entry into the potentially lucrative oneworld alliance was postponed this month as it scrambles for capital.
Unpaid staff have left in droves, and scores of flights have been cancelled to cut costs. Turboprop maker ATR, a joint venture of EADS and Finmeccanica, cancelled 38 plane orders from Kingfisher in January because the airline hadn't paid for the planes.
"Right now this is just minor fire-fighting, at some point they will need to consider a wholesale scale-back, such as a possible dumping of the international services," an airline sector analyst at a Mumbai brokerage told Reuters.
Kingfisher's parent chief financial officer, Ravi Nedungadi, declined to comment on the results when contacted by Reuters.
Kingfisher, named after India's most famous beer owned by its parent company, lost 4.44 billion rupees in the fiscal third quarter that ended in December, 74.8 percent more than a loss of 2.54 billion rupees a year previously.
The company has lost 11.8 billion rupees in the first nine months of the current fiscal year that ends in March, a 35 percent rise from a year earlier.
Revenue in the third quarter fell 15.2 percent to 13.42 billion rupees.
India's airlines are likely to lose up to $3 billion in the fiscal year ending March as the industry's total debt swells to $20 billion. Five of India's top six airlines are loss-making, including state-owned Air India which is operating on taxpayer life support.
Fierce competition has driven down prices and margins as costs stack up. Domestic demand grew 12 percent in the quarter, but capacity addition stood at 17 percent over a year earlier, Kingfisher said.
Only one analyst tracks the company specifically, according ThomsonReuters StarMine.
A slashing of routes to cut costs resulted in Kingfisher's domestic market share slip to 12.1 percent in December, the No. 5 carrier. In July, it had a 19 percent market share and was the second-largest carrier.
Kingfisher suffered an increase in fuel cost of 1.9 billion rupees during the quarter, a rise of 37 percent from 12 months previous. Fuel costs accounted for 44 percent of operating expenses during the quarter, the company said.
Rival Jet Airways posted its fourth straight quarterly loss last month on higher fuel costs.
Compounding the impact of rising crude prices, taxes levied by state-run oil marketing companies make jet fuel prices in India among the highest in the world.
A government panel this month approved a plan to allow carriers to import jet fuel directly, a break that could help them cut fuel costs by up to 20 percent but also require new spending.
India's government is expected to soon allow foreign carriers to take a 49 percent stake in local airlines, a move Kingfisher has long called for, which may prove to be the saviour of the troubled industry.
Two major Gulf carriers told Reuters this month that they have no interest in taking a stake in Kingfisher. Kingfisher has also opened talks with SC Lowy Financial, a Hong Kong distressed debt firm, in a sign it may be running out of traditional funding options.
Depreciation and interest charges during the quarter rose 7.5 percent from a year earlier to 4.31 billion rupees.
Shares in Kingfisher, which has never made a profit, have dropped almost 60 percent since the beginning of last year, shrinking the airline's market value to around $270 million.
The company's shares were up 2 percent, or 0.5 rupees, at 10:45 a.m. (0515 GMT) on Thursday, in a Mumbai market down 0.4 percent.