A sign of troubled times -- Kingfisher counter at Mumbai Airport.
MUMBAI: Shares in India's Kingfisher Airlines fell more than 19 per cent to a record low on Friday after a string of flight cancellations heaped further problems on the debt-ridden carrier.
Investors exited the stock as fears over its long-term survival were raised, forcing the loss-making airline to deny suggestions that it might be shut down.
"The question does not arise," Kingfisher's chief executive Sanjay Agarwal told the Press Trust of India news agency late Thursday.
Analysts agreed, but warned that the airline was still very critical and that only a quick cash infusion and restructuring of operations would revive its fortunes.
Kingfisher, India's second-biggest airline with an 18.8-per cent market share, announced on Tuesday that it was cancelling at least 50 flights a day every day until November 19.
But the Times of India newspaper said on Friday that cancellations were more widespread and only 269 of Kingfisher's scheduled 418 daily flights operated on Thursday.
India's Directorate General of Civil Aviation has now called on the airline to explain the widespread cancellations, which it said were carried out without prior consultation.
A Kingfisher spokesman declined to comment on the report or the company's response to the government, but said that before this week's announcement of cancellations, the airline operated 340 flights a day.
Shares in the carrier dropped 19.1 per cent to 17.55 rupees in early trade on the Bombay Stock Exchange but recovered slightly to 19.05 rupees, still down 12.2 per cent in afternoon trade.
"The situation is very critical," said Kapil Kaul, from the Centre for Asia Pacific Aviation in New Delhi.
"We're in the peak period for travel and they're having to cancel 30 to 40 per cent of flights," he told AFP.
"It's pretty clear why: their aircraft are grounded and they're trying to reconfigure their fleet. The fact is that the airline urgently needs cash."
The CAPA assessed that Bangalore-based Kingfisher needed close to $400-500 million in cash. The airline has debts of $1.2 billion and is in talks with bankers to reduce its high interest changes.
Unable to raise funds in the debt or equity markets, some reports speculated Friday that the group would have to turn to the government for a bailout.
"I don't think they will fold," Kaul said, adding that fresh funding was vital.
The Economic Times business daily on Friday said that some international leasing firms were looking to take back aircraft loaned to the airline because of defaults on payments.
The airlines, which was founded by liquor baron Vijay Mallya, announced last month that it was axing its low-cost service Kingfisher Red to maximise revenues from full-fare flights.
The airline has been having trouble making payments to oil companies and airports and had delayed salaries to its employees for August and September.
The airline, which has not posted a profit since it was founded in 2005, reported in July that quarterly net losses widened by more than 40 per cent year-on-year to 2.63 billion rupees ($54 million).
High fuel prices, fierce competition, heavy interest costs and unprofitable operations have been blamed.
Kingfisher is hoping the Indian government approves a proposal to allow foreign airlines to buy stakes in domestic carriers, which could result in a fresh influx of money for the cash-strapped company.