This document discusses managing economic volatility and Kingfisher Airlines' financial troubles. It provides a cause and effect diagram showing factors that contributed to Kingfisher's debt of Rs. 7,000 crore and ongoing losses. These include high fuel prices, interest rates, cancellation fees, and declining passenger numbers. The document proposes actions like debt restructuring, allowing foreign direct investment, and negotiating with banks for lower interest investment to boost confidence and reduce Kingfisher's financial burden.

1. MANAGING IN ECONOMIC VOLATILITY
By:
Dinesh Tiwari – B39
Pankaj Singh Parihar – B53
Keshav Lagwal – B64
Vipin N Nair – B65
Deepak Raj Joshi – B66
Pankaj Deswal – B68

2. Introduction
• Incorporated in 1995 as Deccan Aviation
• The name was changed to Kingfisher Airlines in 2008
• MD: Dr Vijay Mallya
• No 2 Airline in India before 2011
• Market Cap: Rs 7500 million, Revenue: Rs 1400 million
• Now on the verge of Bankruptcy
• Total debt : Rs 1.35 billion
• Began with a share price: Rs 64
• Current share price: Rs 9.31

3. CAUSE AND EFFECT DIAGRAM
Addl loan of Hyd and Bgl
Restructuring Decline in Strikes and BPCL filed
asked for landing
1000 cr of debt passengers attrition court case charges
Bank converted Owes Rs 890
750 cr to equity No assets to Flight Delay in salary
cr to fuel Undisclosed
(23% stake in sell or cancellations payment
KFA) suppliers landing
mortgage
charges to AAI
Debt of Rs 7000 crore
Hostile Operational loss
of Rs 1027 cr
Economic last year
Dec in EPS
Climate
16
Dec in profit From 240 to 175
Consecutive flights per day
quarterly High expenses margin
losses
28 planes left
High Price war as compared
20% of
Borrowing Weakening to 64
Inc fuel prices earnings paid
rate rupee
as interest
High 19 aircrafts
Competition returned since
2009

4. Perspective Key Result Critical Metric Current Target Business Action Required
Area Result Critical
Perspective Key Result success
Key Result Critical Metric Value Value
Current Target Initiative
Perspective Key Metric
Metric Current Target Business
Current Target Business
Business Action
Action
Action
Area Factor
success Value
Area
Area success Value ValueValue Initiative
Value Value Initiative
Initiative Required
Required
Required
Factor
Factor
Organisation 1) Retention Efficient Hire HR Lots of Judicious Team Retention of
Finance
Operation 1)1) Covering Changes Reducing
Customer Optimum Bulk order, Keeping Rs High PayIncreaseInclusion of FDI in Involvement
Restru Economical Routing Operational off Moderate Increaseon Allow FDI
Concentrate Price
al Learning of talent HR persons money being use of building talent by
(Performance Pricing
(Satisfaction)
(Excellence) Untapped in the
cture Reducing accumulate 7000Cr
Routes low profit costs are Debt pricingSecuritization (
4-5 pricing revenue domestic sales, of Investors
Discrimination
and Growth departme with spent on funds activities incentives/perks/
) potential Policies d NPA’sticket debt by 30% to
Debt cost per
cities high Selling Reduce
market debts) Negotiation
off
nt proven promotional bonus
cities and per mitigate operational with Banks for
track extravaganza
start year operatio cost investment
record
flights to nal cost
2) those
Efficient Cost
Providing Yearly cost toHuge rate
Adhere High ProfitBetter Reducing Better Reducing
Render
Reducing Cutting ascutting by Loss
Service
cities Service schedule of Generatio Financial costing Lease Burden
service quality at services as
Debt promised 10 – 15%
No fleet Cancellatio compared low price to increase
n promised
Equity cuts or n to cash inflow
2) payment of Adequate Reduce Salary not To pay To inculcate To maintain the
2)Ratio
Seek Seek govt. cancellatio16 Tocompetitor govt
get Seek Fresh
salaries fund unnecess being paid the salary sense of cost and profit
subsidiaries in support n consecutive into confidence and investment
ary and clear loyalty with optimum
fuel prices quarterly profit good business from investors
expendit the towards the utilization of
losses plan to boost
ure unpaid company resource
confidence in
salary
govt

5. Gantt Chart
W W W W W W W W W W1 W1 W1 W1 W1 W1 W1 W1 W1 W1 W2 W2 W2 W2 W2
Tasks / Activities 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4
Team Building activities
Inculcate sense of loyalty towards
the company
Retention of talent by
incentives/perks/bonus
Fresh investment from investors to
boost confidence in govt.
Allow FDI
Render services as promised
Price Discrimination
Reducing Lease Burden to increase
cash inflow
Negotiation with Banks for
investment
Involvement of Investors

6. Project Scope
Initiative Analyzing the current structure of debt and
restructure it.
Dependencies • Current economical and Financial environment
•Stakes of parties involved in debt lending
•Legal structure regarding aviation industry
Statement of work Restructuring the debt taken from various
parties and easing financial pressure on the
company
Expected results • Conversion of debt into equity shares from
lenders and promoters
•Increased loan tenures
•Low borrowing costs
Timelines April 2012 –March 2013 (Fiscal year)
Budget Constraints As required