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Kingfisher Airlines Financial Crisis Analysis

Group 10 proposes a financial management project to analyze Kingfisher Airlines' losses since its inception in 2003. Kingfisher invested heavily in expanding its aviation business but was unable to recover operational costs, eroding its net worth. With total debt of Rs. 7000 crores and losses of Rs. 1027 crores in 2011 and Rs. 5690 crores since 2003, Kingfisher owes substantial unpaid dues to fuel suppliers, airports, and lessors. Unable to meet costs and breakeven points, Kingfisher canceled over 200 flights and returned 24 leased aircraft, damaging its brand as a 5-star airline.

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Vivek Anandan
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69 views1 page

Kingfisher Airlines Financial Crisis Analysis

Group 10 proposes a financial management project to analyze Kingfisher Airlines' losses since its inception in 2003. Kingfisher invested heavily in expanding its aviation business but was unable to recover operational costs, eroding its net worth. With total debt of Rs. 7000 crores and losses of Rs. 1027 crores in 2011 and Rs. 5690 crores since 2003, Kingfisher owes substantial unpaid dues to fuel suppliers, airports, and lessors. Unable to meet costs and breakeven points, Kingfisher canceled over 200 flights and returned 24 leased aircraft, damaging its brand as a 5-star airline.

Uploaded by

Vivek Anandan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Financial Management Project Proposal: Group 10

Sakshi Jain (PGP30167); Shwetha Subramanian (PGP30172); Hetvi Vashi


(PGP30177); Vishnu Chauhan (PGP30178); Vivekanandan K K (PGP30179)
Objective: Like Lockheed, the UB group is a concern that invests in
various ventures such as brewing, distilling, real estate, engineering,
fertiliser, bio tech and IT. One of their business venture was to enter in the
aviation industry though KingFisher airlines. Huge investments were made
which could not be recovered and operation cost were not recovered
making KF airlines a loss making enterprise since its inception in 2003.
This eroded the net worth of the company. Their inability to meet
investments forced the company to request its bankers for further credits
and an extension to meet their breakeven point.
Introduction: Indias aviation sector with the countrys three-listed
carriers Kingfisher Airlines, Jet Airways and SpiceJet posting losses in
the three months ended 31-Dec-2011 (3QFY2012), traditionally the
strongest quarter for Indian carriers, marking four consecutive quarters in
the red. Kingfisher Airlines, the airlines of good times owned by the King
of good times, posted the heaviest loss among the listed carriers in what
was a tough period for Indias aviation sector as a whole. The losses
reflect not only issues at the individual carriers but some fundamental and
structural challenges in the Indian aviation sector.
Kingfisher has a total debt of Rs 7000 Crores even after about Rs 1400
crores was written off. The airline made an operational loss of Rs 1027
Crorein 2011. And the loss since its inception in 2003 of Rs 5690 Crores. It
owed approximately 890 crores to all its fuel suppliers. The situation with
the fuel is so bad that Indian Oil has put a Kingfisher on a Cash and Carry
basis. BPCL and HPCL, the other two suppliers, have stopped supplying
fuel completely. BPCL has even filed a court case against Kingfisher
Airlines for recovery on unpaid dues of over Rs 250 Crores. it owes the
Airports Authority of India, undisclosed landing charges. Both the
Bangalore and the Hyderabad airports asked Kingfisher for landing
charges before they allow the KF planes to land. It has no assets that it
can sell or mortgage as all its aircraft are currently leased. Kingfisher
returned more than 24 aircraft as it could not afford the lease amount.
Their inability to meet breakeven point and recover costs caused them to
cancel over 200 Flights dealing a mortal blow to its image of a 5 star airline.

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