kingfisher airlines-Corporate Governance

Kingfisher Airlines – Corporate Governance

Prepared by: Archa Bhandari Raveen Vyshya Venu malli Vijay naga prasad Pawan kumar

Introduction to the company •

Kingfisher Airlines Limited is an airline group

based in India owned by Dr. Vijay Mallya. •

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Kingfisher Commenced its operations on May 9,2005. Kingfisher Airlines was the holder (along with only a few other airlines) of the 5-st 5- star ar rating by Skytrax along with Cathay Pacific, Pacific, Qatar Airways,, Airways

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Kingfisher failed due to bad governance - Veerappa Veerappa Moily Moily

Problems Problems with Kingfisher Airlines •

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Bad Governance Absence of professional management. Individual decision takers. Lack of delegation is being talked about as the major move that Mallya did not undertake when running the airline. Growth does not mean merely increasing turnover year after year.

Problems with KFA Continued.. •

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After acquiring Air A ir Deccan, Kingfisher suffered suffered a loss of over 1,000 crore for three consecutive years. Even though India is a price sensitive country, kingfisher kingfisher owner, owner, Vijay Mallya maintained maintained high fares fares for the airlines. It had also been hit badly by external factor factors. s.

Problems with KFA Continued.. •

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Agency loss

Huge amount of bank loans with high interest rates. High investments to promote the brand name kingfisher to makeup for the prohibition on advertising for the business of alcohol.

Numbers and Statistics •

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Kingfisher has an outstanding debt of  over Rs 13,000 crores. Over Rs 6,000 crore of accumulated losses Kingfisher shares have lost around 67% of  their value in 2011

Numbers and Statistics •

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The share value reached a record low on 11carrier ’s market market value Nov-2011, reducing the carrier’ to around USD213 million. Kingfisher falls deep into the red in 2QFY2012 with 16th consecutive quarterly loss; net loss margin of -29%

Suggestions •

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Introduction of professional professional management into the board. Route rationalization: Cutting back unprofitable unprofitab le sectors and services services to several cities. Debt recast: asking

banks to reduce rates rates or take a cut on loans.

Suggestion contd… •

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Decisions should be not be taken by the Mr. Mallya itself alone but it should be consulted with BOD. Raising capital: it has plans p lans to raise $ 200 MILLION through GDR. FDI: if the FDI limit is raised and foreign airlines are allowed to buy a stake, mallya could recapitalise kingfisher.