Kingfisher Airlines : had it ever been good for the king of good times ?
KingFisher Airlines:
The fastest growing Air Industry in the world, many players are keen to step in and bag their profilts, but news-maker is something other way round, its about the most awarded and admired airlines which bankrupt.
Here below is the analysis of the entire issue.
Kingfisher Airlines,
Announced as a private Airliner operating from a country of 100 crore populated country, India.
Owned by Vijay Malya, the liquor tycoon United Beverages Group.
. By early 2012, the airliner had accumulated alomost 7000cr debt, consequences were no salary, employees went on strike, flights got delayed and few also go canceled
Loan Restructure:
Kingfisher went for loan restructure and borrowed more and more funds from the banks like:
1. State Bank of India
2. Bank of Baroda
3. Punjab National Bank
4. IDBI
5. Central bank of India
6. Bank of India
7. Corporation Bank
Till the end of 2011 Dec, the arrears were upto 280 crore, the banks had asked Kingfisher to clear its dues before seeking any new credit.
SBI is the largest is the largest creditor by lending it around 1500 crore rupees and also the leader of consortium, had declared Kingfisher as NPA on Feb 2012 which, was soon followed by rest of the banks too.
Consequences :
Due to the lack of funds, salaries were not paid to employees, rents were not paid, flights were grounded, all these resulted in drop of passenger traffic. Only 22 Aircrafts were running on 20th of Feb 2012, that is only 5% of the flights were flying and that to delayed, passengers who were fedup with the service, had to wait for almost 5 to 9 hours at airports, even then they would only be updated with "Flight Cancelled Message".
DGCA had summoned the CEO of Kingfisher Mr. Sanjay Agarwal for the disruptions in service, by March 3rd 2012, Central Board of Exercies and Custom had froze mony of the bacnk accounts which company holds, as it was unable to pay dues as per schedule The Aviation ministry had also warned from completely shutting down all the flights.
IATA Suspension :
On march 7th IATA had stopped ticket sales of Kingfisher citing non payment of dues as the main reason. Though the airliner had said "accounts suspension as a main reason for payment", no alternative solution worked for it as even many other employees went on strike. Goverment had refused to bail out and even many airports also warned kingfisher as it failed to pay rents.
Thus finally the crisis was complete to keep "The Flying Good Times " down forever atleast till Mr. Mallya merges his beautiful airline to some Generous buyer.
The fastest growing Air Industry in the world, many players are keen to step in and bag their profilts, but news-maker is something other way round, its about the most awarded and admired airlines which bankrupt.
Here below is the analysis of the entire issue.
Kingfisher Airlines,
Announced as a private Airliner operating from a country of 100 crore populated country, India.
Owned by Vijay Malya, the liquor tycoon United Beverages Group.
The company carried a tagline "Fly The Good Times". Started its operations in May 5th 2005 with a fleet of
4 brand new Boeing A320. The airliner initially operated in domestic aviation, connecting many of the metropolitan cities of India, renounced for the luxury and service it gained enough publicity to attract many paying customers who were fed up with the lost cost and less luxury airlines Air Deccan and the govt. owned Air India. Kingfisher started its international operations from 3rd September 2008 connecting Banglore and London.
Achievements:
There are many awards which rated Kingfisher among the top airliners of the country,
1. The only Airline is one of the only 7 airlines rated 5 Stars by "SkyTrax".
2. Operated 400 regional flights with regional and long haul international flights.
3. By May 2009, its the highest carrier of passengers 1 Million in India.
4. Until 2011, its the 2nd largest share holder of air traffic in India.
5. First Indian Airline to have entertainment on each seat for every guest enabling them to watch TV on flight.
This list doesn't end, there are quite a few awards, but though being most awarded airline of the country the crisis couldn't be evaded.
Crisis Time/ Reasons /Analysis:
Ever since the airlines commenced its operations in 2005, not even a single Quarter had that end with profits.
Every Quarter and every financial year was only loss making.
Though the loss wasn't quite significant for such a huge company, it all started with Kingfisher acquired
"Air Deccan" the acquisition caused a loss of 1000 Cr for 3 consecutive years.
Air Deccan :
A lost cost airliner which offered cheap tickets for its customers, after the merger Kingfisher had insisted in changing its name to "Kingfisher Red".
Passengers of Air Deccan were affected by the price hike, Kingfishers esteemed high paying customers have found another option from the same brand with lesser cost. thus the customers gradually reduced.
Fuel hikes and operational costs increased gradually leading to accumulation of debts.
The detailed Financial Statistics were listed below.
. By early 2012, the airliner had accumulated alomost 7000cr debt, consequences were no salary, employees went on strike, flights got delayed and few also go canceled
Loan Restructure:
Kingfisher went for loan restructure and borrowed more and more funds from the banks like:
1. State Bank of India
2. Bank of Baroda
3. Punjab National Bank
4. IDBI
5. Central bank of India
6. Bank of India
7. Corporation Bank
Till the end of 2011 Dec, the arrears were upto 280 crore, the banks had asked Kingfisher to clear its dues before seeking any new credit.
SBI is the largest is the largest creditor by lending it around 1500 crore rupees and also the leader of consortium, had declared Kingfisher as NPA on Feb 2012 which, was soon followed by rest of the banks too.
Consequences :
Due to the lack of funds, salaries were not paid to employees, rents were not paid, flights were grounded, all these resulted in drop of passenger traffic. Only 22 Aircrafts were running on 20th of Feb 2012, that is only 5% of the flights were flying and that to delayed, passengers who were fedup with the service, had to wait for almost 5 to 9 hours at airports, even then they would only be updated with "Flight Cancelled Message".
DGCA had summoned the CEO of Kingfisher Mr. Sanjay Agarwal for the disruptions in service, by March 3rd 2012, Central Board of Exercies and Custom had froze mony of the bacnk accounts which company holds, as it was unable to pay dues as per schedule The Aviation ministry had also warned from completely shutting down all the flights.
IATA Suspension :
On march 7th IATA had stopped ticket sales of Kingfisher citing non payment of dues as the main reason. Though the airliner had said "accounts suspension as a main reason for payment", no alternative solution worked for it as even many other employees went on strike. Goverment had refused to bail out and even many airports also warned kingfisher as it failed to pay rents.
Thus finally the crisis was complete to keep "The Flying Good Times " down forever atleast till Mr. Mallya merges his beautiful airline to some Generous buyer.
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