Case Study
Kingfisher Debt Crisis
Abstract: Kingfisher Airlines, which redefined air travel in India, hit financial turbulence in late 2011 due to mounting debt and a shortfall in expected revenue. Despite restructuring the debt with the help of creditors, the airline found it difficult to extricate itself out of its troubles. The case tracks the transformation in the Indian aviation sector as well as the ups and downs of Kingfisher Airlines. It provides information on the complex debt restructuring exercise at Kingfisher Airlines.
Introduction: Kingfisher Airlines, a leading Indian private airline , faced a serious financial crisis in November 2011. The airline, which had not made a profit since its inception, went through debt restructuring once in March 2011 in the form of a bailout package from a consortium of 13 banks that included State Bank of India and ICICI Bank. Even after the debt restructuring and infusing of fresh capital in the form of an additional debt of Rs. 12.12 billion from the consortium of banks, the airline found itself unable to overcome the problem and reported a net loss of Rs. 7322.10 million during the first six months of the FY 2012. For FY 2011, the airline had accumulated losses of 102.74 billion and more than fifty percent of its net worth had been eroded. The cash-strapped and bleeding airline cancelled 175 flights out of the 418 allotted for the Winter Schedule, which included four international flights to Bangkok. According to the Center for Asia-Pacific Aviation (CAPA) chief executive, Kapil Kaul (Kaul), the airline urgently required capital infusion of $400 million, including an immediate $200 million to maintain its daily operations...
Kingfisher Airlines Kingfisher Airlines, a subsidiary of The United Breweries Group (UB Group), was established in 2003. Through its parent company, the airline had a 50 percent stake in low-cost carrier Kingfisher Red. The airline began its domestic operations on May 9, 2005, with a fleet of
Abstract: Kingfisher Airlines, which redefined air travel in India, hit financial turbulence in late 2011 due to mounting debt and a shortfall in expected revenue. Despite restructuring the debt with the help of creditors, the airline found it difficult to extricate itself out of its troubles. The case tracks the transformation in the Indian aviation sector as well as the ups and downs of Kingfisher Airlines. It provides information on the complex debt restructuring exercise at Kingfisher Airlines.
Introduction: Kingfisher Airlines, a leading Indian private airline , faced a serious financial crisis in November 2011. The airline, which had not made a profit since its inception, went through debt restructuring once in March 2011 in the form of a bailout package from a consortium of 13 banks that included State Bank of India and ICICI Bank. Even after the debt restructuring and infusing of fresh capital in the form of an additional debt of Rs. 12.12 billion from the consortium of banks, the airline found itself unable to overcome the problem and reported a net loss of Rs. 7322.10 million during the first six months of the FY 2012. For FY 2011, the airline had accumulated losses of 102.74 billion and more than fifty percent of its net worth had been eroded. The cash-strapped and bleeding airline cancelled 175 flights out of the 418 allotted for the Winter Schedule, which included four international flights to Bangkok. According to the Center for Asia-Pacific Aviation (CAPA) chief executive, Kapil Kaul (Kaul), the airline urgently required capital infusion of $400 million, including an immediate $200 million to maintain its daily operations...
Kingfisher Airlines Kingfisher Airlines, a subsidiary of The United Breweries Group (UB Group), was established in 2003. Through its parent company, the airline had a 50 percent stake in low-cost carrier Kingfisher Red. The airline began its domestic operations on May 9, 2005, with a fleet of