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Sunday, March 2, 2014

Kingfisher Airlines Growth and Downtrend

Startup of Kingfisher Airlines
Indian Airlines industry Air India was started by JRD Tata in July 1932 as Tata Airways. That airways was now known as Air India as it was taken over by Indian Goverenment. Kingfisher Airlines was established in 2003 it is owned by Bengaluru United Breweries limited i.e. UBL group of Vijay Mallya. Airlines started its commercial operations from 9th May 2005 with four new Airbus operating a flight from Mumbai to Delhi. Kingfisher Airlines never comes in profit since it’s foundation in 2005.
It started its international operations on 3 September 2008 from Bengaluru to London.

Kingfisher airlines touched many highs in starting period but what leads to Kingfisher Airlines downfall as Indigo Airlines still making good profit in India. Everyone knows in India is Vijay Mallya is of Flamboyant Nature and undeciplined nature leads to failure of Kingfisher Airlines.

Main reasons behind downfall of Kingfisher airlines:-


è      Initially Kingfisher Airlines launched only all economy class airplanes with food and entertainment after 1 year of operations in economy class they suddenly shifted to luxury class. As they shifted from economy to Luxury class they keeps on changing there airplane models and keeps on expansion and never in the system to stabilize airlines. Kingfisher Airlines reports net loss of year ending 30th June 2006 was Rs. 3.4 billion,Kingfisher Airlines was soon become an airline like five star air travel and was becoming famous among business travellers. 

è In December 2006 Kingfisher announced to provide entrainment in flight by tie up with DTH pioneer Dish TV India Limited.  

è The income for period ending 30th June 2007 increased to INR 4.1 Billion but losses also rises to INR 4.19 Billion 

è Kingfisher Airlines was right on track up to 2007 with Kingfisher had carried 17.5 million passengers with 41 aircrafts and schedule of 255 flights.

è In Year 2008 Kingfisher Airlines Merged with Air Deccan which was founded by Captain G R Gopinath in 2003. Kingfisher Airlines downfall started as soon as they bought Air Deccan. Kingfisher spends up to Rs. 550 Crore in buying a domestic carrier which had losses of over 550 Crore.

è In 2008 when recession hits whole world Jet fuel prices touched $150. That makes very tough to survive for Airlines.

è Financial statements for year ending March 31st 2009 after acquiring Air Deccan shows that income increased to Rs. 55 billion but lossed increased to Rs. 16 Billion .

è  In Year 2009 Kingfisher Airlines leads Indian Aviation Industry with market  share  of  22.9%  with  11  Million  passengers  flying  with Kingfisher in last fiscal year. The fleet although got reduced to 68 aircrafts from 77 aircrafts and  domestic  flights  per  year  got  reduced  to  366  but  international  operations  increased significantly  to  12  flights  daily. 

è Year ending 31st March 2010 losses increses to Rs. 16.4 billion and gross income reduced to Rs. 52.7 billion.

è In year 2010 Jet Airways becomes India Largest Passenger carrier with Indian Passenger carrier Share of 25.5 % and Kingfisher Airlines share comes down to 19.8%. IndiGo first comes into light which reported 90% occupancy Kingfisher’s  domestic  daily operations  were  same  366  flights  daily  but  its  international  operations  increased  to  28 flights daily.

è Year Ending 31st March 2011 airlines reported an increased gross income of Rs. 64.9 billion and reduced losses of Rs. 10.2 billion. 

è At that Juncture 1st time that it have serious cash flow problems they blamed the same for rising fuel prices. Things get worsened so much that kingfisher was unable to pay dues of oil companies.

è Pilots starts leaving Kingfisher and in 2011 few pilots leave Kingfisher. SBI  biggest creditor to Kingfisher  starts giving warning to the firm that if they are unable to raise funds atleast 160 million dollars in equity then they will not restructure their debt.

è The income for year ending 31st December 2011 stood at approx. INR 13.4 Billion which was lowest since 2007 and the losses increased sharply  to  INR  4.4  Billion .

è On 5th January 2012 State Bank of India declared Kingfisher  Airlines debt as NPAi.e. a  nonperforming asset. SBI’s exposure to Kingfisher is staggering over INR 14.5 Billion.
Debt Piles up so much to Kingfisher  that creditors filed suits Kingfisher and that will forced Kingfisher  to  ground  majority  of  aircrafts.  Kingfisher Airlines definitely needs to raise fresh capital as well.Banks did give Kingfisher  one last chance last year by infusing capital which was on request converted into shares  but  due  to  landslide  fall  in  share  price  of  Kingfisher,  the  investments  of  Banks  have  almost  eroded. 
è Kingfisher Airlines founded in 2005 but never comes in profit since it’s operations.
è Kingfisher airlines stock touched life time high of 290.10 Rs./ Share in 14th Dec 2007 now trading at 2.60 Rs/Share on 28th Feb 2014 with life time low of 2.51 Rs/Share, What else required to explain that how they erode investors money.
è KFA has debt of RS 7500 Crore debt from banks against securities of nearly Rs 2000 crores which includes guarantees of UB Holding and United Breweries, shares of united spirits, Mangalore Chemicals, Mcdowell's and other tangible security like the villa in Goa and Kingfisher's other premises.
è Main  lenders to Kingfisher are SBI, Bank of Baroda, Bank of India, Punjab National Bank and United Bank.
è Banks are very much hopeful that the KFA management will be able to bring an investor such as Etihad and infuse Rs 650 crores into the company and restart its operations.
Kingfisher was founded in 2005 is gifted to Mr . Sidhartha Mallya who was Just 18 years old that time. But Sidhartha Mallya always busy on petty things like parties and Kingfisher calendar which is well known by everyone and that lead to inadequacies in his finances.  
IPL is also added to Kingfisher fall as huge amount get divered to IPL from Kingfisher airlines. Even few time ago Mallya requested government to bail out their company but Ajit Singh Aviation Minister that time told that they will not bail out a private carrier as Air India already needed bailout. Kingfisher reputation even worsened when it came in limelight that employees tax were not submitted to government on time since the last three years. Government of India also freezed 40 Kingfisher’s bank account. Mr Mallya then sell 49% of his ownership of Force India( F1 car) to Mr Subrato Roy to get kingfisher going but it too failed to save the airlines from tatters.

Kingfisher Airlines Growth and Downtrend

Startup of Kingfisher Airlines
Indian Airlines industry Air India was started by JRD Tata in July 1932 as Tata Airways. That airways was now known as Air India as it was taken over by Indian Goverenment. Kingfisher Airlines was established in 2003 it is owned by Bengaluru United Breweries limited i.e. UBL group of Vijay Mallya. Airlines started its commercial operations from 9th May 2005 with four new Airbus operating a flight from Mumbai to Delhi. Kingfisher Airlines never comes in profit since it’s foundation in 2005.
It started its international operations on 3 September 2008 from Bengaluru to London.

Kingfisher airlines touched many highs in starting period but what leads to Kingfisher Airlines downfall as Indigo Airlines still making good profit in India. Everyone knows in India is Vijay Mallya is of Flamboyant Nature and undeciplined nature leads to failure of Kingfisher Airlines.

Main reasons behind downfall of Kingfisher airlines:-


è      Initially Kingfisher Airlines launched only all economy class airplanes with food and entertainment after 1 year of operations in economy class they suddenly shifted to luxury class. As they shifted from economy to Luxury class they keeps on changing there airplane models and keeps on expansion and never in the system to stabilize airlines. Kingfisher Airlines reports net loss of year ending 30th June 2006 was Rs. 3.4 billion,Kingfisher Airlines was soon become an airline like five star air travel and was becoming famous among business travellers. 

è In December 2006 Kingfisher announced to provide entrainment in flight by tie up with DTH pioneer Dish TV India Limited.  

è The income for period ending 30th June 2007 increased to INR 4.1 Billion but losses also rises to INR 4.19 Billion 

è Kingfisher Airlines was right on track up to 2007 with Kingfisher had carried 17.5 million passengers with 41 aircrafts and schedule of 255 flights.

è In Year 2008 Kingfisher Airlines Merged with Air Deccan which was founded by Captain G R Gopinath in 2003. Kingfisher Airlines downfall started as soon as they bought Air Deccan. Kingfisher spends up to Rs. 550 Crore in buying a domestic carrier which had losses of over 550 Crore.

è In 2008 when recession hits whole world Jet fuel prices touched $150. That makes very tough to survive for Airlines.

è Financial statements for year ending March 31st 2009 after acquiring Air Deccan shows that income increased to Rs. 55 billion but lossed increased to Rs. 16 Billion .

è  In Year 2009 Kingfisher Airlines leads Indian Aviation Industry with market  share  of  22.9%  with  11  Million  passengers  flying  with Kingfisher in last fiscal year. The fleet although got reduced to 68 aircrafts from 77 aircrafts and  domestic  flights  per  year  got  reduced  to  366  but  international  operations  increased significantly  to  12  flights  daily. 

è Year ending 31st March 2010 losses increses to Rs. 16.4 billion and gross income reduced to Rs. 52.7 billion.

è In year 2010 Jet Airways becomes India Largest Passenger carrier with Indian Passenger carrier Share of 25.5 % and Kingfisher Airlines share comes down to 19.8%. IndiGo first comes into light which reported 90% occupancy Kingfisher’s  domestic  daily operations  were  same  366  flights  daily  but  its  international  operations  increased  to  28 flights daily.

è Year Ending 31st March 2011 airlines reported an increased gross income of Rs. 64.9 billion and reduced losses of Rs. 10.2 billion. 

è At that Juncture 1st time that it have serious cash flow problems they blamed the same for rising fuel prices. Things get worsened so much that kingfisher was unable to pay dues of oil companies.

è Pilots starts leaving Kingfisher and in 2011 few pilots leave Kingfisher. SBI  biggest creditor to Kingfisher  starts giving warning to the firm that if they are unable to raise funds atleast 160 million dollars in equity then they will not restructure their debt.

è The income for year ending 31st December 2011 stood at approx. INR 13.4 Billion which was lowest since 2007 and the losses increased sharply  to  INR  4.4  Billion .

è On 5th January 2012 State Bank of India declared Kingfisher  Airlines debt as NPAi.e. a  nonperforming asset. SBI’s exposure to Kingfisher is staggering over INR 14.5 Billion.
Debt Piles up so much to Kingfisher  that creditors filed suits Kingfisher and that will forced Kingfisher  to  ground  majority  of  aircrafts.  Kingfisher Airlines definitely needs to raise fresh capital as well.Banks did give Kingfisher  one last chance last year by infusing capital which was on request converted into shares  but  due  to  landslide  fall  in  share  price  of  Kingfisher,  the  investments  of  Banks  have  almost  eroded. 
è Kingfisher Airlines founded in 2005 but never comes in profit since it’s operations.
è Kingfisher airlines stock touched life time high of 290.10 Rs./ Share in 14th Dec 2007 now trading at 2.60 Rs/Share on 28th Feb 2014 with life time low of 2.51 Rs/Share, What else required to explain that how they erode investors money.
è KFA has debt of RS 7500 Crore debt from banks against securities of nearly Rs 2000 crores which includes guarantees of UB Holding and United Breweries, shares of united spirits, Mangalore Chemicals, Mcdowell's and other tangible security like the villa in Goa and Kingfisher's other premises.
è Main  lenders to Kingfisher are SBI, Bank of Baroda, Bank of India, Punjab National Bank and United Bank.
è Banks are very much hopeful that the KFA management will be able to bring an investor such as Etihad and infuse Rs 650 crores into the company and restart its operations.
Kingfisher was founded in 2005 is gifted to Mr . Sidhartha Mallya who was Just 18 years old that time. But Sidhartha Mallya always busy on petty things like parties and Kingfisher calendar which is well known by everyone and that lead to inadequacies in his finances.  
IPL is also added to Kingfisher fall as huge amount get divered to IPL from Kingfisher airlines. Even few time ago Mallya requested government to bail out their company but Ajit Singh Aviation Minister that time told that they will not bail out a private carrier as Air India already needed bailout. Kingfisher reputation even worsened when it came in limelight that employees tax were not submitted to government on time since the last three years. Government of India also freezed 40 Kingfisher’s bank account. Mr Mallya then sell 49% of his ownership of Force India( F1 car) to Mr Subrato Roy to get kingfisher going but it too failed to save the airlines from tatters.