Decline of Kingfisher Airline

1. Decline of Kingfisher
Airlines

2.  Brief about “KINGFISHER AIRLINES”
 Awards and Achievements
 Analysis Framework: SWOT Analysis
 Operational reasons for failure
 Financial reasons for failure
 Financial Analysis: Establishment of failure through Financial
Statements
 Comparison with other players
 Comparison of India Aviation Industry v/s Global Aviation Industry
 Final Storyline summarizing reasons for failure

3. Company Registered 2003
Operations commenced 9 May 2005
International Operations 3 sep. 2008
Operations Ceased Oct.2012(Flights suspended)
Feb.2013( License Revoked)
Company Slogan Fly The Good Times
Parent Company United Breweries Group
Registered Office UB city, Bangalore
Employees 5696(2012)

4.  King Club has won the 21st
Annual Freddie Awards 2008 in the following
categories:
 Best Bonus Promotion
 Best Customer Service
 Best Member Communications (First Runner-up)
 Best Award Redemption (First Runner-up)
 India's only 5 Star airline, rated by Skytrax and 6th airline in the world.
 Voted as India's Favourite Airline
 The Best Airline" and "India's Favourite Carrier' in a Survey conducted by
IMB.

7.  Starting of the Crises:
 Net Reported Losses and debts since inception (Rs. In Crores)
 It created following payment problems:
 Bank Arrears
 Delayed salary
 Fuel Dues
 Government Dues
 Aircraft Lease Rental Dues
Year Mar.12 Mar.11 Mar.10 Mar.09 Mar.08 Jun.07 Jun.06 Mar.05
Loss 2628.00 1027.40 1646.22 1608.83 188.14 419.58 340.55 16.79
Secured
loans
5900.00 5148.53 4842.43 2622.52 592.38 716.71 448.16 159.42

8. Rs. in Crores
Particulars 31.03.2012
(Audited)
31.03.2011
(Audited)
Income from operation 5493.41 6359.64
Expenditure
Employee costs 669.51 676.01
Aircraft Lease Rental 868.45 984.00
Aircraft Fuel 2945.89 2274.03
Other operating Expenses 2086.31 2421.26
Depreciation / Amortization 341.87 241.04
Profit/(Loss) from operation before interest (1418.62) (236.70)
 High Operating Cost and fuel prices amounts to more than 90% of Income (FY’12)
 Loss occurs because of these two factor corresponds to 90-100% of income. The
position further gets Worsened due to weakening rupee.
Financial Analysis: Establishment of failures through P/L Accounts

9. Kingfisher Jet Airlines Go Air Indigo
High operating
cost.
Comparatively less
operating cost.
Comparatively less
operating cost.
Comparatively
less operating
cost.
Many unprofitable
routes.
Focused on profit
making routes.
Good marketing
and branding.
Focused on profit
making routes.
More turn around
time .
Less turn around
time.
Less turn around
time.
Less turn around
time.
Diversified
Aircrafts.
Standardized
aircraft &
Positioned as a
value airline .
Standardized
aircraft &
Positioned as a
value airline .
Standardized
aircraft.

10.  Aviation economics are not favorable in India:
 Aviation turbine Fuel (ATF) prices.
 Mandatory requirement to fly on
certain unviable route.
 Inadequate Infrastructure:
 Resulting in delays and higher cost for airlines.
 Poor financial health of most Airlines:
 Sharp fluctuation in ATF prices.
 High Debt burden.
 Foreign exchange fluctuation.
 Lack of adequate Hedging mechanism (For fuel) have added to the woes.
 Highly competitive & Price Sensitive traveler base.
Source: ICRA Research

11. Top reasons for failure:
 High Operating Cost and fuel prices amounts to more than
90% of Income (FY’12).
 Airlines was unable to make profit and keep on piling
debts.
 Acquisition of Air Deccan.
 Depreciation of Indian Rupees.
 Lack of Long-term strategy.
 Unprofitable Route.

12. Questions ???

13. Submitted by:
Anjali Somani
Nayan Jain
Purvi Shah
Sourabh Porwal
Thank You