GROUP MEMBERS NAME
Anil kumawat- 012169 (Finance B)
Dhirendra Kumar Singh- 012215 (Finance C)
Jai Singh- 012150 (Finance B)
Neetu Rupnar- 012205 (Finance C)
Prem Selvaraj- 012110 (Finance B)
Sunny Jain- 012101 (Finance B)
Ravi Jaiswal- 012111 (Finance B)
Mohammad Haider- (Finance B)
What factors caused kingfisher airlines
to adopt liquidation strategy?
Start of the crisis
Tackling the crisis
Change in its market
Mistakes kingfisher airline
Kingfisher Airlines Ltd. (KAIR) is a private airline
based in Bangalore, India.
Owned by Vijay Mallya of United Beverages
Kingfisher Airlines started its operations on May
9, 2005, with a fleet of 4 brand new Airbus A320.
It started its international operations on 3 September
2008 by connecting Bangalore with London.
Kingfisher Airlines is one of the only seven airlines
awarded 5-star rating by skytrax.
Kingfisher operates 400 daily flights with regional and
long-haul international services.
In May 2009,KFA carried more than 1 million
passengers, giving it the highest market share among
airlines in India.
Until December 2011,KFA had the second largest
share in India’s domestic air travel market.
First Indian Airlines to have in flight entertainment
systems on every seat with guest being able to
watch TV in flight.
START OF THE CRISIS
Ever since the airline commenced operations in
2005, the company is reporting the loss.
Situation became more horrible after acquiring the
air deccan in 2007, the company suffered a loss of
over Rs.1000 crores for 3 executive years.
The start of the crisis was the freezing of the bank
accounts of the airline by the Income Tax
As on 10th Jan 2012, Kingfisher Airlines has
service tax arrears of 60 crore.
KFA has not been depositing service tax collected
from passenger with the department since
November 2011 on regular basis and instead has
been diverting it for other purpose on regular basis.
TACKLING THE CRISIS
In November 2010, the company adopted the way of
debt restructuring and under that total 18 leading
lenders, those have landed total Rs. 8000 crores,
agreed to cut interest rates.
Debt restructuring also could not change the game. by
restructuring, company had reduced the interest
charges by Rs. 500 cores every year, but due to the
high leverage condition and increase in cost, the
company started to face the liquidity problem.
Change in its market share
airline had the
Now, due to a
crisis faced by
the airline at
of 2012, it has
MISTAKES KINGFISHER AIRLINE
KFA was launched as a premium business class
airline, the market size for business class tickets is small
There was a lack of understanding of customer
requirements and basing a decision that luxury sells in
Kingfisher airline borrowed heavily to fund loss making
Bought new aircraft when airline suffered from over
Mallaya began the airline with a rush to buy planes.
He started with four-five planes but orders a lot
more, and fast
From air-hostesses to food and in-flight
entertainment, the cost per passenger as a whole
was double of what jet airways was offering
The DGCA suspended its flying license on October
KFA has temporarily shut down its operations .
Due to financial problem it has reduced the fleet
from 63 to 16.
Tax authorities in India, in may 2012, froze the
In march 2012. the airline was suspended by the
international air Transport Association from
using its inter-airline fund clearing system.
In June 2012 because cheques issued by
kingfisher had bounced. GVK – India's secondlargest airport operator – launched legal
proceedings against kingfisher airlines.
The Kingfisher Airlines financial crisis refers to a
series of events that led to severe disruptions
within Kingfisher Airlines.
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 for three
By early 2012, the airline accumulated losses
of over 7,000 crore.
CONSEQUENCE OF CRISIS
Aircraft lease rental dues
Kingfisher Airline has staff strength of 6,000 and
spends 58 crore on salaries a month.
Airlines delayed salaries of its employees in
August 2011, and for four months in succession
from October 2011 to January 2012.
Kingfisher also defaulted on paying the Tax
Deducted at Source from the employee income
to the tax department.
In Jul 2011, Hindustan Petroleum Corporation
Limited (HPCL) stopped the fuel (ATF) supplies for
about two hours to Kingfisher airlines owing to the
non-payment of dues.
Bharat Petroleum Corporation in 2009 had filed a
case against Kingfisher airlines for non-payment of
Since 2008, it has been reported that Kingfisher
Airlines has been unable to pay the aircraft lease
rentals on time.
As a result, Kingfisher had to return the A320
aircraft to GECAS.
Kingfisher received a notice from the Airports
Authority of India on February 2012 regarding
accumulated dues of 255.06 crore.
Kingfisher Airlines had not paid some bankers
(Lenders) as per the Debt Recast Package (DRP)
with lending banks.
By Feb 2012, Kingfisher has been declared NPA
(Non-performing asset) by following banks
Bank of Baroda
LIQUIDATION OF KINGFISHER
Kingfisher Airlines seem to have entered its last phase.
Banks decided to sell the physical assets of Vijay Mallya.
After selling the shares of United Spirits Ltd (USL) in the
open market, banks have now decided to sell all other
assets of Mallya
It includes villa in Goa, office at Mumbai’s Andheri
area, a luxury yacht, buses used by KFA to ferry
travelers at airports and other ground-handling
equipment to recover their dues
Total value of collateral was Rs 6,500 crore against the
dues of Rs 7,000 crore to all banks, including the
unapplied interest of Rs 850 crore.
Financial crisis of KFA was due to following
reasons: High fuel prices.
Huge interest outgo due to heavy investment in
purchase of aircraft.
Highly competitive industry
Business model was not effective.
Recession-lose passenger(High operation cost
due to low demand)
5 to 7-anil
8 to 10-dhirendra
11 no slide-mohsin
12 to 13-jai
14 to 15-neetu
16 to 17-ravi
19 to 20—prem
21 to 22-sunny
23 to 25- mohd. Hayder.