Kingfisher Airlines Study
CEO role
The breweries business of Kingfisher has been doing excellent over the years now. UB group should continue focussing on the existing brewery business and try to make it more profitable. The Kingfisher Airlines with its existing debt of close to Rs. 7,000 crores facing the acute problem of debt burden, Bank Arrears, Income Tax problems for not paying TDS, Delayed Salaries, Fuel Dues, Aircraft Lease Rental Dues, Erosion of net worth and brand image. With the staff going on strike and airlines on the verge of stopping because of airlines suspended from IATA, the one possibility is to sell off the NPA assets to some other player and exit the business. This would come hard on both the existing debt lenders and the UB group as they would hit hard on their brand image and also the existing NPA would be quite less than the debt amount forcing the Banks to take huge losses on the balance sheet if they would not restructure debt and go for forced sale.
The best way going forward for the kingfisher is to restructure the debt by injecting the equity using FDI either for the Kingfisher Airlines or in the existing breweries business. Also if FDI bill for the airlines industry get passed, a joint venture with a foreign player thereby leveraging the existing capability and operational excellence of the foreign player could be beneficial. This should be backed by solid business plan for the future learning from the mistakes of last 6 years and following the standards set by the existing profitable competitor in the Indian market.
Airlines industry is expected to perform good going forward with expected reforms and lowering of costs by the government. Some of the points which should be taken into considerations are:
1) 1QFY2012/13 marked the best result in 18 months. In the three months ended 30-Jun-2012 all private Indian carriers, with the exception of Kingfisher, were profitable, albeit that in several cases this was as a result of sale-and-leaseback and
The breweries business of Kingfisher has been doing excellent over the years now. UB group should continue focussing on the existing brewery business and try to make it more profitable. The Kingfisher Airlines with its existing debt of close to Rs. 7,000 crores facing the acute problem of debt burden, Bank Arrears, Income Tax problems for not paying TDS, Delayed Salaries, Fuel Dues, Aircraft Lease Rental Dues, Erosion of net worth and brand image. With the staff going on strike and airlines on the verge of stopping because of airlines suspended from IATA, the one possibility is to sell off the NPA assets to some other player and exit the business. This would come hard on both the existing debt lenders and the UB group as they would hit hard on their brand image and also the existing NPA would be quite less than the debt amount forcing the Banks to take huge losses on the balance sheet if they would not restructure debt and go for forced sale.
The best way going forward for the kingfisher is to restructure the debt by injecting the equity using FDI either for the Kingfisher Airlines or in the existing breweries business. Also if FDI bill for the airlines industry get passed, a joint venture with a foreign player thereby leveraging the existing capability and operational excellence of the foreign player could be beneficial. This should be backed by solid business plan for the future learning from the mistakes of last 6 years and following the standards set by the existing profitable competitor in the Indian market.
Airlines industry is expected to perform good going forward with expected reforms and lowering of costs by the government. Some of the points which should be taken into considerations are:
1) 1QFY2012/13 marked the best result in 18 months. In the three months ended 30-Jun-2012 all private Indian carriers, with the exception of Kingfisher, were profitable, albeit that in several cases this was as a result of sale-and-leaseback and