Kingfisher Ppt Shweta Sharma

7/28/2019 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.


19/19

Thank You

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Kingfisher Ppt Shweta Sharma

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