kingfisher ppt shweta sharma
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KINGFISHER AIRLINES CRISIS
SHWETA SHARMA
04215603911
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OBJECTIVES
To create awareness regarding the crisis of Kingfisher airlines.
To obtain information regarding the crisis of kingfisherairlines.
To extent knowledge.
To find out major areas, which has led to crisis?
Effect of Kingfisher Airlines crisis on Airline sector.
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RESEARCH METHODOLOGY
Research is based on secondary type datacollection which includes second hand data.
Its collected via
Newspapers
Magazines
Websites
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KINGFISHER
FLY THE GOOD TIME.
Kingfisher Airlines Ltd. (KAIR) is a private airline
based in Bangalore, India. Owned by Mr Vijay Mallya of United Breweries
Group.
Kingfisher Airlines started its operations on May 9,2005, with a fleet of 4 brand new AirbusA320.
It started its international operations on 3rd September
2008 by connecting Bangalore with London.
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Cont.
Kingfisher Airlines is one of the only seven airlines
awarded 5-star rating by Skytrax.
Kingfisher operates 400 daily flights with regional andlong-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 Indias domestic air travel market.
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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 crores for three consecutive years.
By early 2012, the airline accumulated losses of over
7,000 crores.
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START OF THE CRISIS
The start of the crisis was the freezing of the bankaccounts of the airline by the Income TaxDepartment.
As on 10th Jan 2012, Kingfisher Airlines has servicetax arrears of 60 crores.
KFA has not been depositing service tax collectedfrom passenger with the department since Nov 2011on regular basis.
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REASONS
It acquired loss making airline and fell into a debt
trap. It bought new aircraft when the industry suffered
from heavy losses and low capacity
Kingfisher was blinded by a desire to overtake Jet
Airways and become the king of skies
Price of Rupee Depreciating which has also to its
crisis
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CONSEQUENCES OF CRISIS
Its half of its fleet grounded.
Salaries delayed.
Several members of its staff went on strike.
Kingfishers position in top Indian airlines on thebasis of market share had slipped to last from 2because of the crisis
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DATA
ANALYSIS
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SWOT ANALYSIS
STRENGTH:
Strong brand value
Support from parent company
Add 1 million passenger created a year
WEAKNESSES:
Financial issue due to heavy Debt.
Eagerness to go International and buying loss making firm.
Unable to generate expected returns on investment done.
Overspending of funds.
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OPPORTUNITIES:
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 have increased.
THREATS:
Rising fuel cost
Govt. policies
Least cost carrier.
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STOCK ANALYSIS
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DEBT STRUCTURE
YEAR Mar-12 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05
Loss -2328.01 -1027.4 -1646.22 -1608.83 -188.14 -419.58 -340.55 -16.79
Secured
loans
5,368.76 5,184.53 4,842.43 2,622.52 592.38 716.71 448.16 159.42
Unsecured
loans
2,661.24 1,872.55 3,080.17 3,043.04 342.00 200.00 3.50 125.06
amount in Rs crores
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COMPETITOR ANALYSIS
ATTRIBUTES KINGFISHER JET AIRWAYS SPICE JET
Price 25% higher than
jet Airways
Lower than
Kingfisher
Airlines
Extremely low
Permission to fly
to US
NO YES NO
Permission to fly
to UK
YES YES YES
Targeted customer Both end
customer
Both end
customer
Lower end
customers
Positioning Premium
Domestic
Segment
Premium
Domestic
Segment and
International
Segment
Lowest fares and
no frills
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RATIO ANALYSIS
Mar-12 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05
CURRENT
RATIO
0.81 0.76 0.78 0.64 0.97 0.80 1.01 1.51
DEBT
EQUITY
RATIO
-2.18 -2.39 -2.04 -2.66 4.95 2.38 2.02 20.83
EARNING
PER SHARE
-40.30 -20.64 -61.95 -60.50 -13.85 -30.97 -34.69 -54.05
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FINDINGS
1) Unplanned investment options.
2) Efforts to make the image of the Kingfisher Airlines top notch even
after incurring heavy losses.3) Proper and appropriate analysis of investment and the returns were
not done.
4) Shortsightedness in terms to seeing the future uncertainty in the
Aviation Sector.5) Trapped in a debt trap and still trying to increase the burden with ill
strategies.
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CONCLUSION
DGCA as a regulatory authority have lacked the earlysight of the crisis and worked for its stoppage.
Debt trap should have been avoided so as to maintain
flying.
Management of Kingfisher Airlines competencies andefficiencies are questionable and the policies beingfollowed are a big blot over the industry and is a lesson
for future industries. Kingfisher closure could have been stopped if certain
timely measure by the industry or regulatory authoritywould have been taken.
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Thank You
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