3. About kingfisher…
Kingfisher airlines, an Indian based airline group
IT is owned by Mr. Vijay Mallaya, who is always
been associated with luxury, extravagant lifestyle
and vibrancy.
The parent company, United breweries Group is
third largest sprit company in the world.
He is also known for owning one of the world’s
most expensive yachts and a cricket, Formula One
team and IPL Royal challengers team.
4. About kingfisher
A general perception prevails among
stakeholders, such that ‘Luxury’ and ‘Vijay
Mallya’ are always associated with each other.
Kingfisher airlines (KFA), a brand known for its
luxury; glamour and its premium class
positioning in the airline industry.
KFA acquired Air Deccan which is a LCC (Low
cost carrier) and Air Deccan has been renamed
Air Deccan as Kingfisher Red
6. 1. STRENGTHS
Strong brand value and reputation in the minds of
the consumer
UB group as the parent company
First Indian airline to have a new fleet of planes
Quality service and innovation
More than 80 destinations
Less than 100 people (employees) per aircraft
7. 2. WEAKNESSES
Still in RED (still to Break Even)
(An outstanding of 950crs only to oil marketing
cos till may end )
High ticket pricing (KF First & Class)
Tough competition from Indian as well as
international players
8. 3. OPPORTUNITIES
If able to survive for a couple of years, then can
have a big market share
Untapped International Markets
Untapped cargo market
Expanding tourism business
9. 4. THREATS
Falling demand
Over capacity in the skies
ATF prices
Economic slowdown
Infrastructure issues
11. Increasing Debts
Though Kingfisher Airlines had a luxurious positioning in
consumer’s ‘share of mind’, it always failed to attract good
investors since its inception.
KFA suffered from huge debts and it failed to pay back AAI
(Airport Authority of India) around Rs. 840 crore in the year
2008, currently it owes around Rs.3000 crore to AAI.
The downtrend in the aviation industry started only since
2011, but Mallya failed to pay debts even since 2008, shows
his poor commitment to the stake holders.
KFA owes Rs.2000 crore to its vendors and suppliers which
further worsens the situation to continue its operations.
13. Employee Retention
With increasing debts and the declining trend in
the aviation industry, KFA failed to deliver its
services and it was not able to pay back salaries to
its employees.
In the past few months over 60 pilots have
resigned their jobs which crumpled their
operation leading to reduction of flights from 400
to 170 flights per day.
14. Declining Trust
The KFA failed to deliver the trust among the
customers, shareholders, suppliers and even the
government authorities.
Even the government was not willing to bail out
KFA from the financial crisis.
16. Brand Conflict
Kingfisher airlines, a premium class category in
the airline industry acquired a low cost carrier Air
Deccan. This led to brand conflict among the
customers, and brand association miserably
weakened since acquisition.
People failed to differentiate the services of
Kingfisher Red and Kingfisher which diluted the
existing brand equity.
17. Acquisition during poor financial
health
Decision to buy Air Deccan which was already
suffering from low customer turnover was a
wrong move. Acquiring a company with weak
balance sheet and a flanker product brand led
KFA to further suffer from financial losses.
18. Economic Slow Down
The global economic slowdown, where
companies trying to cut flight trips and cut their
costs were one of the major reason for industry to
collapse.
The increasing fuel costs and the operational
costs slowed down their high end services to
customers.
19. Failure to focus on ‘Points of Parity’
‘Points of parity’- deliver services at affordable
cost and maintain punctuality.
KFA failed to deliver both, KFA focused only on
higher order needs of the customer like travel
delight and in-flight experience and failed to
deliver common services like safety, comfort and
economy pricing to cater Indian customers.
21. Financial Crisis
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 crore (US$199.5 million) for three
consecutive years.
Payment problems(Delayed salary, Fuel Dues,
Aircraft lease rental dues, Income Tax,Non-payment
of dues to lenders).
22. Financial Crisis(16th july)
The aviation ministry has, however, made it clear it
will not pull the plug on Kingfisher, which has a debt
of over Rs 7,000 crore with banks - mostly public
sector banks - and its total liabilities-cum-losses are
over Rs 10,000 crore
"It is not up to the aviation ministry to shut down
Kingfisher as the government is not keen on such a
move. If Kingfisher closes, uncomfortable questions
would be raised on why banks - mostly public sector
ones - lent Rs 7,500 crore to a commercial entity that
did not have a viable business model," said top
sources.
24. Will kingfisher bounce back ???
Vijay Mallya Says,
“ We have funds stuck in various accounts (over
50 accounts were frozen) and as each account has
been de-frozen and we have access to our funds,
the immediate priority is to pay salaries”(april)
25. Will kingfisher bounce back ???
He is willing to take suggestions from lenders on
possible management or board changes to revive
the flagging airline.
He is also talking to potential strategic and non-strategic
investors and looking forward to the
government notification on allowing foreign
airlines to buy an up to 49 per cent stake in
domestic airlines.
26. RECENT NEWS(14th july)
Vijay Mallya asks striking pilots not to 'disgrace'
Kingfisher
The airline's promoter Vijay Mallya on Saturday asked the
agitating employees not to talk to the media or "disgrace"
the company saying it would affect the recapitalisation
efforts.
Vijay Mallya, however, gave no assurance by when the
agitators salary dues would be cleared
If some of you think that cancelling flights, speaking to
media, or disgracing our company will produce cash and
salaries, you are wrong", Mallya said.
27. It’s a make-or-break situation: Kingfisher
Airlines (16th july)
NEW DELHI: After putting up a brave front
in the face of mounting adversity, crisis-ridden
Kingfisher has for the first time
acknowledged that it is in a make-or-break
situation. On Saturday night, Kingfisher
executive vice-president Hitesh Patel sent
an e-mail to pilots unpaid for five months,
saying: "I would like to, however, let you
know that our airline is standing at a critical
juncture, which will define whether we
make it or not."
28. Kingfisher Airlines pilots plan to move
court over salary (16th july)
"(Airline) Chairman Vijay Mallya's communication
to the employees conceals more than it reveals.
While he claims over 75 per cent staff have been
paid, he conveniently ignores the fact that he has
still to pay four months' salaries to them. Now we
have come to a situation where we are left with
no option but to move the labour court over the
issue," airline sources said
29. Kingfisher Airlines settles below face
value on BSE
Mumbai Jul 17, 2012, 19:14 IST(7:14 pm)
Shares of debt-laden Kingfisher Airlines today
fell to Rs 9.66, below their face value of Rs 10 for
the second consecutive day.
