AIRLINES TO OPT AUDIT RED-FLAGS
In the midst of ongoing disturbances in airline space to engender profits, independent officials of a minimum of 2 Indian planes have declared Red Flags for their claimed status of ‘going concerns’. This term ‘going concern’ is actually used to denote a company which has enough resources to have continuous operations so as to avoid any risk of going bankrupt.
Now, the investors of the Kingfisher Airlines have raised red flags from some time now, auditors of affordably priced plane SpiceJet have raised an issue in their most recent quarterly report that the company’s overall payback amount exceeded its total credits from an amount of Rs 1,145 Crore, as recorded on 30th June ’14.
Kingfisher Airlines, SpiceJet and Jet Airways are the three airlines whose auditors are quoted saying that the company’s ability to match up sufficient finance directly affects the ‘accurateness of the going concern’. This approach is in favor of raising sufficient funds so as to match up obligations and function profitably.
While Jet Airways cleared the air by stating that their most recent quarterly report on 30th June ’14 highlighted the fact that their company’s functioning as ‘going concern’ is affected by its connection with Etihad Airways. Also, Kingfisher has still not revealed its quarterly report.
In context with the reports filed by Jet Airways, their alliance with Etihad has taken the company for preparation of financial statement on the ‘going concern’.
It’s believed that if this deal is continued, it would incur losses and will have a negative impact, as said in majority of reports made by 30th June ’14.