Monday, February 20, 2012

Kingfisher Latest Carrier to Suffer Liquidity Shortfall

The spate of news reports about struggling airlines continues today with word that Kingfisher Airlines had to cancel more than 100 flights over the weekend, stranding numerous passengers, and is now under scrutiny from the Director General of Civil Aviation as a result. See Travel Firms Dump Kingfisher Airlines; KFA Pulls Out Inventory on Many Travel Portals, Economic Times, Feb. 21, 2012 (available here). Apparently, Kingfisher's troubles were precipitated by having its accounts frozen last week by tax authorities. The Indian government has not yet enacted an expected rule change, of which Kingfisher has been a vocal proponent, that will allow carriers to seek investment from foreign airlines. Whether the change is enacted in time to help Kingfisher remains to be seen. The Indian government has rejected the possibility of a bailout, but Kingfisher is insisting it will continue to operate.

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