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INTRODUCTION
Kingfisher Airlines acquired 26% stake in Air Deccans parent company Deccan Aviation. A combined fleet of 71 Airbus A320 Aircraft operate 537 flights to 69 Indian cities. Kingfisher served the corporate and business travel segment. The major participating factor behind the deal was chance for kingfisher to go international within first 5 years.
Cont
Another problem it focused more on international services than domestic which lead to investing ample of cash. Restructuring of routes of Air Deccan which lead to cost sensitive and thus people shifted to economical variants like spicejet and indigo.
Consequences of Problems
The airline today is saddled with total debt of Rs 8000 crore. Kingfisher was forced to take a loans form Banks which now have a total exposure of Rs.7000 crore. The airlines missed out to raise Rs. 1000 crore through global depository receipts. It is also struggling to meet its working capital needs. It owns close to Rs.7600 crore to 14 banks. It reported a net loss of Rs. 469 crore for September quarter because of increase in fuel prices and inability to hike fares due to competition.
Cont.
The bank accounts have been frozen by income tax authorities. The frozen account has disrrupted payments to suppliers, salaries to employees. This led to employee strikes and cancellation of flights and also closed down its low cost carrier Kingfisher Red.
Suggestions
This business requires full time attention and it seems that Mallya being very busy in running his diverse businesses is unable to focus his attention on the Kingfisher.
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