Bad time continues for the king fisher-king of good times

Bad time continues for the king fisher-king of good times

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.

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

About kingfisher

SWOT Analysis of Kingfisher Airlines

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

1. STRENGTHS

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

2. WEAKNESSES

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

3. OPPORTUNITIES

Falling demand

Over capacity in the skies

ATF prices

Economic slowdown

Infrastructure issues

4. THREATS

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.

Increasing Debts

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.

Employee Retention

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.

Declining Trust

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.

Brand Conflict

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.

Acquisition during poor financial health

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.

Economic Slow Down

‘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.

Failure to focus on ‘Points of Parity’

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).

Financial Crisis

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.

Financial Crisis(16th july)

Kingfisher Airlines: Vijay Mallya wants to bounce back

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)

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.

Will kingfisher bounce back ???

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.

RECENT NEWS(14th 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."

It’s a make-or-break situation: Kingfisher Airlines (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

Kingfisher Airlines pilots plan to move court over salary (16th july)

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.

Kingfisher Airlines settles below face value on BSE

By- DEEPAK JHA

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