8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 1/16

KINGFISHER AIRLINES DECCAN

AIRWAYS

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 2/16

INTRODUCTION

� Chairman Vijay Mallya

� Kingfisher Airlines was established in 2003. It

is owned by the Bangalore based UnitedBreweries Group. The airline started

commercial operations in 9 May 2005 with a

fleet of four new Airbus A320-200s operating

a flight from Mumbai to Delhi.

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 3/16

SHAREHOLDING PATTERN

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 4/16

Merger Details

� In January 2008, Kingfisher acquired an initial 26%stake in Air Deccan for Rs. 550 crores.

� The Kingfisher Airlines-Deccan Aviation merger swap

ratio has been fixed at 7:3. This means shareholders inthe UB group-promoted Kingfisher Airlines will receivethree shares of Deccan for every seven shares that theyhold.

� After the swap ratio was finalized, UB Holdings had inexcess of 51 per cent in the merged entity. Before themerger, the UB Group held nearly 46 per cent stake inDeccan Aviation and fully owned Kingfisher Airlines.

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 5/16

� The deal was closed through allotment of 3.52

crore fully paid-up equity shares, valued at Rs

155 a share, to UB. The new shares were

issued at a premium of Rs 8.80 or 6 per cent

over Air Deccans closing price of Rs 146.20 on

NSE.

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 6/16

Deccan lossesFor the quarter ended December 31, 2007, Deccan posted a netloss of Rs 190.86 crore on revenues of Rs 567.63 crore.

�

Kingfisher had posted a loss of Rs 575.8 crore in FY07, on a turnoverof Rs 1,553 crore and it is believed that the airline has accumulatedlosses of about Rs 1,200 crore, which amounts to a negative networth of Rs 385 crore.

� This financial year, Kingfisher is expected to record a turnover of Rs

3,000 crore, while revenues for Deccan should be in the region of Rs2,200 crore.

� Deccan shares lost 1.81 per cent on the Bombay Stock Exchangeand closed at Rs 173.90.

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 7/16

Financial Data for FY 2006-2008 (Rupees in billions)

9 months endedMarch 2008

Year ended June2007

15 Months endedJune 2006

Revenue 144 214.2 135.1

Gross Prof it -2.16 0.69 0.04

Gross Prof it Margin -15% 3.22% 0.296%

Operating Expenses 17.61 20.73 13.47

Operating Income -3.565 -4.072 -2.071

Net Loss 1.88 4.19 3.41

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 8/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 9/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 10/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 11/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 12/16

BENEFITS

� Optimal use of manpower, aircraft

� Better pricing power from consolidation

�Cut in maintenance, fuel and insurance costs

� Huge discounts on all purchases

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 13/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 14/16

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 15/16

SYNERGIES FROM MERGER

� Sharing of physical resources both on ground and in aircould potentially spread fixed cost over a larger base andhence lower unit cost

� Both the companies can rework on route and network

strategies formation so that both the airlines benefittogether as they have same flights between twodestination

� After building their route and network strategies, they canincrease their passenger load factor.

�Fleet expansion can be optimized to increase AvailableSeat per kilometer (ASKs) as they will have more option tochoose aircraft for short and long haul operationaccordingly.

8/7/2019 KINGFISHER AIRLINES – DECCAN AIRWAYS

http://slidepdf.com/reader/full/kingfisher-airlines-deccan-airways 16/16