Manish

1. PRESENTED BY:
MANISH KUMAR
SCHOOL OF MANAGEMENT
NIT ROURKELA

2. AGENDA
 History
 Current scenario
 Accumulated debt
 Consequence of crises
 Start of the crisis
 Payment problems
 Competitor analysis
 Swot analysis
 Conclusion
 Suggestion

3. HISTORY
 Kingfisher Airlines Ltd. (KAIR) is a private airline based
in Bangalore, India.
 Owned by Vijay Mallya of United Beverages Group .
 Tag line- “FLY THE GOOD TIME”.
 Kingfisher Airlines started its operations on May 9, 2005,
with a fleet of 4 brand new Airbus - A320.
 It started its international operations on 3 September
2008 by connecting Bangalore with London.

4. Cont..
 Kingfisher Airlines is one of the only seven airlines
awarded 5-star rating by skytrax.
 Kingfisher operates 400 daily flights with regional and
long-haul international services.
 In May 2009,KFA carried more than 1 million
passengers, giving it the highest market share among
airlines in India.
 Until December 2011,KFA had the second largest share
in India’s domestic air travel market.
 First Indian Airlines to have in flight entertainment
systems on every seat with guest being able to watch TV
in flight.

5. CURRENT SCENARIO
 The DGCA suspended its flying license on
October 20,2012.
 KFA has temporarily shut down its operations .
 Due to financial problem it has reduced the fleet
from 63 to 16.

6. FINANCIAL CRISIS
 The Kingfisher Airlines financial crisis refers to a series of
events that led to severe disruptions within Kingfisher
Airlines.
 Ever since the airline commenced operations in 2005, it
has been reporting losses.
 After acquiring Air Deccan, Kingfisher suffered a loss of
over 1,000 crore for three consecutive years.
 By early 2012, the airline accumulated losses of over
7,000 crore.

7. CONSEQUENCE OF CRISES
 Its half of its fleet grounded.
 Salaries delayed.
 Several members of its staff going on strike.
 Kingfisher's position in top Indian airlines on the
basis of market share had slipped to last from 2
because of the crisis.

8. START OF THE CRISIS
 The start of the crisis was the freezing of the bank
accounts of the airline by the Income Tax
Department.
 As on 10th Jan 2012, Kingfisher Airlines has
service tax arrears of 60 crore.
 KFA has not been depositing service tax collected
from passenger with the department since
November 2011 on regular basis and instead has
been diverting it for other purpose on regular
basis.

9. ACCUMULATED DEBT
 KFA has a debt of Rs 8030 crore.
 KFA has been loosing money from day one and
has accumulated losses around RS 8000 crore.
 Cumulative due exceeds Rs 15000 crore.

10. PAYMENT PROBLEMS
 Kingfisher Airline has staff strength of 6,000 and
spends 58 crore on salaries a month.
 Airlines delayed salaries of its employees in
August 2011, and for four months in succession
from October 2011 to January 2012.
 Kingfisher also defaulted on paying the Tax
Deducted at Source from the employee income to
the tax department.

11. Conti…
 HPCL: In Jul 2011, Hindustan Petroleum Corporation
Limited (HPCL) stopped the fuel (ATF) supplies for
about two hours to Kingfisher airlines owing to the
non-payment of dues.
 Bharat Petroleum Corporation in 2009 had filed a
case against Kingfisher airlines for non-payment of
dues(250 cr).
 Since 2008, it has been reported that Kingfisher
Airlines has been unable to pay the aircraft lease
rentals on time.

12. Cont…
 Kingfisher received a notice from the Airports Authority of India on
February 2012 regarding accumulated dues of 255.06 crore.
 Kingfisher Airlines had not paid some bankers (Lenders) as per the Debt
Recast Package (DRP) with lending banks.
 By Feb 2012, Kingfisher has been declared NPA (Non-performing
asset) by following banks
 • SBI
 • Bank of Baroda
 • PNB
 • IDBI
 • Central bank
 • BOI
 • Corporation Bank

13. BALANCE SHEET
10000
8000 7651.81
6314.96
5868.07 5823.91
6000 5289.34
4734.62
4000 5822.37 4747.51 INCOME
EXPENDITURE
2000 1569.9 PROFIT
1781.46
0
FY 08 FY 09 FY 10 FT 11 FY 12
-2000 -1027.4
-188.14 -1608.83 -1647.22 -2328.01
-4000
SOURCE: MONEYCONTROL

14. COMPETITOR ANALYSIS
ATTRIBUTES KINGFISHER JET AIRWAYS SPICE JET
Price 25% higher than Lower than Extremely low
jet Kingfisher airlines
Airways and
Indian
Permission to fly NO YES NA
to US
Permission to fly YES YES NA
to UK
IPO Floated Floated Floated
Targeted Both ends of Both ends of Lower end of
Customer customer customer customers
Positioning Premium Premium Lowest fares and
Domestic Domestic no

15. COMPARISION WITH
COMPETITOR
INCOME(CR EXPENSES( PROFIT(CR) TOTAL
) CR) ASSET(CR)
KINGFISHE 5823.91 7651.81 -2328.01 2947.61
R
JET 15477.39 13369.66 -1236.10 12048.61
AIRWAYS
SPICE JET 4019.11 4541.62 -605.77 708.20
CONTAINER 4377.49 3037.22 877.88 5606.43
CORP
SOURCE:MONEYCONTROL

16. COMPARISION WITH
COMPETITOR
FACE LAST SHARE MARKET
VALUE(RS) PRICE CAP(CR)
IN NSE(RS)
KINGFISHER 10 13.20 1067.51
JET AIRWAYS 10 350.65 3027.30
SPICE JET 10 34.40 1666.16
CONTAINER 10 1012.55 13161.41
CORP

17. SWOT ANALYSIS
STRENGTH:
 Strong brand value
 Support from parent company
 Add 1 million passenger created a year
Weakness
 Financial issue due to heavy Debt.
 Laying of employees caused a bad image.
 Unable to generate expected returns on investment done.
 Overspending of funds.

18. SWOT ANALYSIS
Opportunity:
 The Indian aviation industry is growing at a rate of 24% per year.
 Large number of domestic untapped routes.
 Disposable income especially in middle class has increases.
Threats
 Rising fuel cost.
 Govt. policies
 Least cost carrier.

19. CONCLUSION
Financial crisis of KFA was due to following
reasons:
 High fuel prices.
 Huge interest outgo due to heavy investment in purchase of aircraft.
 Overspending/Expenses
 Highly competitive industry
 Business model was not effective.
 Deregulation Act.
 Recession-lose passenger(High operation cost due to low demand).

20. SUGGESTION
 Foreign Investment .
 Fuel efficient planes for shorter distance.
 Improve revenue per passenger.
 Avoid aggressive expansion of fleets.

21. THANK YOU