India's second-biggest airline Kingfisher insisted Thursday it was "100 percent a going concern" after an auditor's report raised doubts about its ability to survive.
Audit company B.K. Ramadhyani said after examining its books that Kingfisher's chances of remaining in business in India's crowded skies could depend on more cash being pumped into it.
"Its net worth is completely eroded," the auditor's report, published Wednesday, said.
It added Kingfisher's ability to keep flying could hinge, among other factors, "on the company's ability to infuse requisite funds for meeting its obligations."
The airline, founded by flamboyant Indian liquor baron Vijay Mallya, responded by saying an independent assessment by banks had confirmed Kingfisher was "viable."
"We are 100 percent a going concern," Prakash Mirpuri, Kingfisher Airlines' vice-president in charge of communications, told media.
More than 4.75 billion rupees ($99.4 million) had already been invested this year in the company, India's second-largest airline by market share, said in an email to media.
Shares in the airline slumped more than five percent to a near 12-month low on Thursday on the auditor's report before retracing slightly. The carrier's shares have shed more than 60 percent since the start of the year.
"The auditors' comments are not good for the company, but these points have been made consistently about the airline," Mahantesh Sabarad, analyst at Mumbai's Fortune Equity Brokers, told media.
The airline has never posted a profit since it took to the air in 2005.
In July, it reported quarterly net losses widened by more than 40 percent year-on-year to 2.63 billion rupees, hit by high fuel prices, interest costs and unprofitable operations.
India's airline market is booming as a burgeoning middle class takes to the skies but the sector's fortunes have been hit by over-expansion, fierce competition and expensive fuel, as well as other costs.
"The problem is that Kingfisher is running out of cash for fuel and other items faster relative to some others in the sector," Sabarad told media.
Kingfisher's Mirpuri added the airline was exploring options to raise more funds through such means as a share rights issue, but gave no timeframe.
Analysts say it would be tough to raise funds that way because of the airline's financial performance.
Mallya, who also controls United Spirits and United Breweries Group, is known in India as the "King of Good Times" for his lavish lifestyle.
He conceived of Kingfisher as a full-service "premium airline" but the Indian market has become increasingly dominated by budget carriers. The carrier has expanded its no-frills operations under its low-fare carrier Kingfisher Red to compete.
Concerns about Kingfisher's prospects have surfaced as the future of debt-loaded state-run Air India, which had an estimated $1.52 billion pre-tax loss last year, is also in question under the weight of multi-billion-dollar aircraft purchases.