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INTRODUCTIONBase: BangaloreOwned by: Dr. Vijay Mallya of United Beverages GroupTag Line: FLY THE GOOD TIMEDomestic Operations started on: 9th May, 2005 with fleet of 4 new Airbus- A320International Operations started on: 3rd September, 2008 (Connecting Bangalore with London)Till 2011, KFA was the 2nd Largest Airline in Domestic Air travel marketDGCA suspended license on 20th October, 2012FINANCIAL CRISISReporting losses since the starting of operations from 2005After acquiring Air Deccan, Kingfisher has suffered losses of over Rs.1,000 Crore for 3 consecutive yearsKFA has suffered a debt of Rs.8,030 CroresFINANCIAL CRISISCumulative due exceeds Rs.15,000 CroresFreezing of Bank a/cs of the KFA by Income Tax DepartmentAs on 10th Jan, 2012 KFA had service tax arrears of 60 CroresREASONS FOR CRISISHigh fuel pricesHuge interest outgo due to heavy investment in aircraft purchaseOverspending/ExpensesHighly competitive industryDeregulation actRecession loss passengerReasons for collapse of Kingfisher AirlinesFrequent change in models After acquiring Air Deccan, Kingfisher suffered a loss of over 1000 crores for three consecutive yearsNo long term CEO or MDSoaring petrol pricesNo proper management Huge amount of loan was taken from different banksFrequent cancellation of flightsSalary issues with employeesCompetitionCONSEQUENCES OF CRISISSalaries DelayedSlipped in the market position Staff going on strikesDefaulted in T.D.S from employee income to tax departmentSince 2008, Unable to pay the aircraft lease on timeCONSEQUENCES OF CRISISBPCL. In 2009 filed a case against KFA for dues of (Rs.250 Crore)Airport Authority of India accumulated dues of Rs.255.06 Crore as on February, 2012On Feb, 2012 declared Non-Performing Assets (NPAs) by several banks as follows:SBIBANK OF BARODAPNBIDBIBANK OF INDIADuties and Responsibilities of StakeholdersOwners:Should have had a plan with some contingency arrangements to bail out the airlineCould borrow from UB group or infuse fresh capital

Regulators:Shareholders could have been saved had the SEBI and other market regulators been more vigilantDid not take action on external auditors reportGovernment:Could only ask banks to increase credit periodGovernment does not bail private enterprisesKFA could have gone to the B.I.F.R

Bankers:Kept giving money to a poorly managed companyConverted loans into equity to avoid classifying the loans as NPAShould call for an EOGM and appoint new directors to turnaround the managementDuties and Responsibilities of StakeholdersKingfisher Airlines (Factors)Political Factors:Open sky policiesFDI limits: 100% for green field airport74% for existing airport100% through special permission49% for airlinesEconomic Factors:Contribution to Indian EconomyRising cost of fuelInvestment in sector of aviationThe growth of middle group effect the aviation sectionSocial Factors:Development of cities leads to better and airportsEmployment opportunitiesSafety regulationThe status symbol attached to air travel

Technological Factors:The growth of e-commerce and e-ticketingSatellite based navigation systemModernization and privatization in airportDevelopment of green field airport with private sectorsEnvironmental Factors:The increase in global warmingThe sudden and unexpected behavior of atmosphere and dependency on weatherShortage of infrastructural capacityTourism saturation

Legal Factors:FDI limitsBilateral treatiesAirlines acquisition and leasing costCriteria For Wilful Defaulter Default in repaymentMisuse of fundsSale of assets Not honouring the letter of comfortLatest NewsVijay Mallya's Kingfisher Airlines Set to Lose Flying License on 31 December 2014

Kingfisher Airlines reportedly has an outstanding in excess of 7,000 crore to a slew of lenders, including UBI.A "willful defaulter" is a borrower who avoids repaying money owed to banks, despite the ability to do so.