Failure of the Kingfisher Airlines

Why do you feel

INDIAN AVIATION INDUSTRY

Jet airways, 17.30% jet lite, 7.50%

Air india, 15.60%

Indigo, 19.20%

Low Cost Carrierrs (~70%) Air india

Indigo
Go Air Spice jet Kingfisher Jet airways Spice jet, 14.30% Go Air , 6.40% jet lite

Kingfisher, 19.50%

Indigo Spice Jet Go Air Jet Lite Kingfisher Red

INTRODUCTION TO UB GROUP
Founded In 1857 Chairmen Dr. Vijay Mallya Headquartered - Richmond Road, Bangalore Products Brewery, Alcohol Beverage, Aviation, Chemicals & Fertilizers, Mangalore Chemicals and Fertilizers Ltd, UB Global (trading company)

Introduction To Kingfisher Airlines

Vision The Kingfisher Airlines family will consistently deliver a safe, value based and enjoyable travel experience to all our guests. Kingfisher commenced its operations on May 9, 2005. Sanjay Agarwal is the current CEO of the company. Kingfisher Airlines is also the sponsor of F1 racing outfit , Force India.

Mission of Kingfisher Airline

Kingfisher Airlines will have 'Fly the Good Times' approach and this will reflect in the experience we will offer to passengers

Current Financial Status

News Flash on 11 june 2012 Kingfisher Q1 loss jumps 147% to Rs 650.8 cr Kingfisher Airlines grappling with liquidity crunch has posted a net loss of Rs 650.8 crore in the quarter ended June 2012 Finance cost increased nearly 33% QoQ and 25.4% YoY to Rs 383.35 crore. Particulars Amount in Crores (Rs)

Net worth
Total Loss Total Debt Total Liablities

2951.19
1027 7,057.08 4463.86

Share price as on 16TH August 2012

Analysis-1
INDIGO AIRLINES 31 destination in india Focused & Profit making routes Low price compared to Kingfisher red Low terminal cost like D1 in New Delhi & 1B in mumbai Focus on low cost Airlines Innovative and radical methods of airline back end operations like financial , leasing . KINGFISHERS 63 domestice destination in India Many Unprofitable routes like Nasik, Hubli etc. Grounding of 14 aircrafts Strict rule s of DGCA on implementation of Time table Multiple Hopping , leading to cascading effect. Hence, delay of flight Operations Shifted to New Terrminals in Delhi &Mumbai

Less Turn around time as compared to Kingfisher red

Focus diverted from high serrvice to low cost

More turn around time as compared to Indigo

Analysis 2
INDIGO Less inventory of Spares Less Trainning Cost Less Maintenance cost Less Operational cost Effective Terminal Use Easy Scheduling KINGFISHER RED Diversified Aircraft with different capacities High Inventory of spares High Trainning cost High maintenance Cost Scheduling difficult More Humen Resources required

Marketing strategy of kingfisher

Holiday Packages @ non profitable routes like Nashik, Aurangabad Pricing Should be at par with spice jet and Indigo Tie ups with Corporates Frequent flyer programmes Better deals and offers for flyers in air

Conclusion
Route rationalisation: Cutting back unprofitable
sectors and services to several cities
Debt Recast : Asking banks to reduce rates or take a cut on loans of find a local investor Raising capital : It has plans to raise $200 million through GDR

FDI: If the FDI limit is raised and foreign airlines are allowed to buy a stake, Mallya could recapitalise Kingfisher