India Kingfisher Airlines crisis worsens as shares fall

India's beleaguered Kingfisher Airlines cancelled more flights on Friday and its shares hit a record low amid continuing debt fears.

Thousands of passengers have been hit by hundreds of cancellations this week.

India's second-biggest airline is about $1.2bn in debt and struggling to raise cash.

Founder and part-owner Vijay Mallya insists the airline will not close but is just cutting losses by rationalising flights and reconfiguring airlines.

'Very critical'

Shares in the carrier dropped 19.1% in early trading on the Bombay Stock Exchange to a record low, before recovering to close at a 9.45% loss.

Kingfisher chief executive Sanjay Agarwal told the Press Trust of India news agency that the question of closure "does not arise".

Kapil Kaul, of the Centre for Asia Pacific Aviation in Delhi, told Agence France-Presse the airline should survive, but added: "The situation is very critical. We're in the peak period for travel and they're having to cancel 30% to 40% of flights."

On Friday, Civil Aviation Minister Vayalar Ravi told Indian TV channels he would talk to Finance Minister Pranab Mukherjee about possible financial assistance to Kingfisher.

Dozens of pilots have reportedly left the airline over the past few months, although Kingfisher says this has been natural attrition.

The Economic Times has also said that companies which have leased Kingfisher planes want them back as payments have fallen behind.

Kingfisher, which axed its low-budget Kingfisher Red last month to try to maximise fares, has been hit by high fuel prices and interest payments.

Reuters news agency reported on Friday that India's aviation regulator, EK Bharat Bhushan, was beginning financial surveillance of all airlines to ensure they did not compromise safety in a difficult financial environment.