kingfisher journey

7/28/2019 Kingfisher journey

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INTRODUCTION Kingfisher Airlines is one of the only seven airlines awarded 5-star

rating by Skytrax along with Cathay Pacific, Qatar Airways, Asiana

Airlines, Malaysia Airlines, Singapore Airlines, and Hainan Airlines.

Kingfisher operates more than 375 daily flights to 71destinations,

with regional and long-haul international services. In May 2009,

Kingfisher Airlines carried more than 1 million passengers, giving it

the highest market share among airlines in India. Kingfisher also

owns the skytrax award for India's best airliner of the year 2011.

Kingfisher Airlines is also the sponsor of F1 racing outfit,Force India,

which Vijay Mallya also owns.


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HISTORY Kingfisher Airlines was established in 2003. The

airline started commercial operations in 9 May 2005with a fleet of four new Airbus A320-200s operating aflight from Mumbai to Delhi.

It started its international operations on 3 September2008 by connecting Bengaluru with London.

Ever since its launch in May 2005, Kingfisher Airlineshas blazed a trail of innovations and introduced a rangeof market-firsts that have completely redefined thewhole experience of flying.


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Cont. They were initially incorporated as a private

limited company on June15, 1995 in Karnatakawith the main object of pursuing chartered

aviation services both for commercial and noncommercial purposes in India and to provideall aviations related services.

Kingfisher Airlines was the first Indian airlineto introduce in-flight entertainment (IFE) systemon domestic flights.


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KINGFISHER CRISIS Kingfisher is facing financial problem from last few years and due

to that they are not able to pay salary to their workers. Due to thisproblem, pilots and co-workers are leaving their job and hencethey are not having pilots and so their plane are idle.

Eleven public sector banks, which were alloted shares by KingfisherAirlines as part of debt recast package, have seen erosion of aboutRs 165 crore in the value of the 17.5 per cent equity held by them inthe debt-ridden carrier.

These banks, including State Bank of India, PunjabNational Bank, Bank of India and IDBI Bank were

allotted 8.8%Kingfisher shares on March 31, 2011

at Rs 64.48 a piece as per the SEBI formula.


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Cont. A shocking 149 flights - 36% of its daily allocated schedule -

were not operated. Officially, Kingfisher has said that it has

cancelled flights to reconfigure its Airbus A-320 aircraft.However, it is learnt that around 130 pilots have quit thecash-strapped carrier in the past few weeks.

Also, airport operators and oil companies have massive duesrunning with Kingfisher and are demanding that owner VijayMallya pay up. Given the shortage of crew and funds, theairline has truncated its schedule, perhaps opting to "fly less

and spend less".


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Cont. Kingfisher Airlines fell to fifth place in domestic market

share during November, from third in the previousmonth, after the cash-strapped carrier grounded planesand cut routes.

Kingfisher, which was once India's second largest carrierby passengers, recorded a market share of 14%,aheadonly of budget carrier Go Airlines.

It has debt of about 65 billion rupees owed toa consortium of banks led by State Bank of India.


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COMPETITORS The country's largest airline, Jet Airways, including its unit JetLite,

had the largest market share of 27.1%, followed by budget carrierIndiGo with 19.8% and Air India with a 17.4%

That growth has failed to translate into profits for India's airline

industry, where all the major carriers except Indigo are loss-making,hit by high jet fuel costs and an inability to raise fares in a cut-throatmarket.

The Centre for Asia Pacific Aviation has forecast a record USD 2.5

billion to USD 3 billion loss for Indian airlines industry for the fiscalyear ending March 2012, with state- run Air India alone likely toaccount for more than half of it


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MORE PROBLEMS Cash-strapped carrier Kingfisher Airlines

has not deposited with the government most of

the income tax it deducted from its

employees' salaries for the last two fiscal years.

Kingfisher has about Rs. 130 cr. tax deducted at

source to be deposited with the government andhas committed to pay it by the end of the current

financial year to March 2012.


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HELPING HAND The lenders to struggling Kingfisher Airlines are trying

to help it and are open to extending further loans to the

carrier, said the leader of a consortium of the airline's banks.

Kingfisher shares rose more than 2% after the SBI chairman'scomments. Indian company Sahara , meanwhile , plans to lendKingfisher more than Rs. 750 cr.

Along with these provisions, even the

government is planning to give a

bailout to the debt-laden carrier- KINGFISHER

so as to support the Indian aviation industry.


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PROPOSALS Kingfisher Airlines will become part of the

global airlines' alliance 'one world' with effect

from February 10 next year. The Vijay Mallya-

owned carrier would become the first airline

from the subcontinent to join any of the

global airline groups, the two others

being 'Star Alliance' and 'Sky Team',spokespersons of the airline and the alliance

said.


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THE FINAL VERDICT Kingfisher Chairman Vijay Mallya said last month that Kingfisher

stopped flying on heavily loss-making routes, and the carrier hadalso grounded some aircraft for fleet reconfiguration after theairline decided to discontinue its low-cost business.

Debt-laden Kingfisher is scouting for funds and is negotiating withits lenders for 7 billion rupees of working capital.

The airline aims to cut debt to 37 billion rupees through sale andlease-back of aircraft, sale of a property in Mumbai and conversion

of rupee loans into foreign loans at a lower interest rate.


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Cont. Besides the DGCA scrutiny, Kingfisher faces the threat of

unpaid aircraft leasing companies seeking the return of their

planes. Spare part vendors too - like other creditors - want

their past dues to be cleared along with current ones.

In its current health, Kingfisher has two options - shut down

or downsize significantly to survive for some time till either

the environment improves or a suitor is ready to buy the

airline.


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kingfisher journey

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