Kingfisher shares rose 2 per cent despite the company reporting widening of the net loss for the

quarter ended December 2011. Here are ten things you need to know about the present financial situation at the company:

Debt-laden Kingfisher Airlines said on Thursday that its net losses almost doubled in the last quarter of 2011, plunging it further into a financial crisis that threatens its survival. The company posted a net loss of Rs 444 crore ($88 million) in the three months to December, compared with Rs 254 crore in the same period a year earlier.

Sales fell about 25 per cent to Rs 1,342 crore from Rs 1,790 crore, while interest charges on its huge debt pile (of over Rs 6,000 crore) rose to Rs 350 crore from Rs 340 crore a year earlier. The company has cut capacity by 5 per cent in the December 2011 quarter.

The companys share price rose 2 per cent on Thursday and has gained 25 per cent over the past 3 months on hope of a revival plan and permission for foreign airlines to buy into the company.

Kingfisher has never posted a net profit since launch in 2005. However, since most airlines post net losses due to surging fuel costs, investors track a metric called EBITDAR which means earnings before interest, taxation, depreciation, amortization and rental costs. Most airlines lease aircrafts and do not own them. Kingfisher Airlines reported an EBITDAR profit of Rs 125 crore against Rs 284 crore in December 2010.

Kingfisher chairman Vijay Mallya is expected to discuss with lenders a new restructuring package after SBI Caps, an investment bank and subsidiary of State Bank of India, gives its report on the viability of the airline.

State Bank of India and other public sector banks like Punjab National bank have declared the Kingfisher Airlines loan as a non-performing asset. This means, it is not generating any interest income for banks. SBI has an exposure of close to Rs 1,500 crore while PNB had Rs 435 crore exposure to the debt laden carrier.

 Kingfisher Airlines has pledged various assets to banks in a bid to raise cash. The company had to hypothecate the Kingfisher brand to banks with an estimated value of Rs 4,100 crore. Hypothecation is a collateral given to lenders to secure debt.

Vijay Mallya, chairman, Kingfisher Airlines, has given a personal guarantee of Rs 248.97 crore, while United Breweries Holdings, which he heads, has provided a corporate guarantee of Rs 1,601.43 crore.

In addition, Kingfisher has provided a pooled collateral security of Rs 5,238.59 crore, which includes Kingfisher House in Mumbai, Kingfisher Villa (Goa), and hypothecation of helicopters.
The Indian express

Hit by high fuel costs, weaker rupee and fierce competition, losses of Vijay Mallya-owned Kingfisher Airlines mounted Rs to 444.26 crore for the quarter ended December 2011 against a loss of Rs 253.69 crore in the same period of last year, taking the total loss to Rs 1,176 crore this fiscal year so far. The company, which has become a non-performing asset in the books of banks, admitted its networth has been eroded. Steep depreciation of the Indian rupee coupled with consistently high crude oil prices has led to a challenging quarter for the Indian aviation industry, the company added. Having regard to capital raising plans, group support, the request made by the company to its bankers for further credit facilities, planned reconfiguration of aircraft and other factors, these interim financial statements have been prepared on the basis that the company is a going concern and that no adjustments are required to the carrying value of assets and liabilities, the company said. However, shares of the company rose by as much as 3 per cent intra-day before closing 0.75 per cent higher at Rs 26.95 on the BSE on Thursday. Revenue in the third quarter fell 15.2 per cent to Rs 1,342 crore against Rs 1,583 crore in the same period of the last fiscal. Kingfishers fuel costs during the quarter rose by 37 per cent to Rs 738 crore from Rs 540 crore previously. Fuel costs accounted for 44 per cent of operating expenses during the quarter, the company said. A slashing of routes to cut costs resulted in Kingfishers domestic market share slip to 12.1 per cent in December, the No 5 carrier. In July, it had a 19 per cent market share and was the secondlargest carrier. Jet Airways and SpiceJet also posted quarterly losses of Rs 101 crore and Rs 240 crore respectively last month on higher fuel costs. According to Kingfisher Airlines, capacity addition by the industry outstripped demand with 17 per cent capacity being added compared to the same quarter last year.

NEW DELHI: The crisis at debt-laden Kingfisher has worsened with the airline reporting a net loss of Rs 444 crore in the quarter ending December 31, 2011, and auditors qualifying the airline's stand of preparing the financial statements on a going concern basis. The Q3 loss is 74.8% higher compared to Rs 254 crore in the same period last year, due to a combination of factors which include high fuel cost, weaker rupee and competition. With the airline reducing flights, Q3 also saw a 15.2% decline in revenue to Rs 1,342 crore. In a statement on the BSE site, Kingfisher boss Vijay Mallya said: "The company has incurred substantial losses and its net worth has been eroded. However, having regard to capital raising plans, group support, request... for further credit... and other factors, these interim financial statements have been prepared on the basis that the company is a going concern and that no adjustments are required to the carrying value of assets and liabilities." The auditors, however, have qualified this claim. Shyam Ramadhyan, partner at Bangalore-based CA firm B K Ramadhyan and Co, which did a "limited review" of the results, says in his report presented to the airline board: "Attention is invited to... financial statements/results being prepared on a going concern basis, notwithstanding the fact that the company's net worth is eroded. The appropriateness of the said basis is... dependent on the company's ability to infuse the requisite funds for meeting its obligations."

Kingfisher Airlines is an airline group based in India. Its head office is The Qube in Andheri (East), Mumbai and Registered Office in UB City, Bangalore.[4][5] Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. The airline has been facing financial issues for many years.[6] Until December 2011, Kingfisher Airlines had the second largest share in India's domestic air travel market. However due to the severe financial crisis faced by the airline, it has the fifth largest market share currently, only above GoAir.[7] Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along with Cathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, and Hainan Airlines[8] Kingfisher operates 250 daily flights with regional and long-haul international services.[1] In May 2009, Kingfisher Airlines carried more than 1 million passengers, giving it the highest market share among airlines in India.[9] Kingfisher also owns the Skytrax award for India's best airline of the year 2011. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also owns.[10]

Contents

[hide]

1 History o 1.1 Operational performance 2 Destinations o 2.1 Codeshare agreement 3 Fleet o 3.1 Current o 3.2 New aircraft orders and deliveries 4 Services o 4.1 Cabin classes 4.1.1 Domestic 4.1.1.1 Kingfisher First 4.1.1.2 Kingfisher Class 4.1.1.3 Kingfisher Red 4.1.2 International 4.1.2.1 Kingfisher First 4.1.2.2 Kingfisher Class 4.1.3 Cargo 4.1.3.1 Kingfisher Xpress o 4.2 In-flight entertainment o 4.3 King Club o 4.4 Kingfisher Lounge 5 Awards and achievements 6 Accidents and incidents 7 Financial turmoil o 7.1 Mounting Losses o 7.2 Debt Recast 7.2.1 Second Debt Recast o 7.3 Brand Pledged o 7.4 Founders pledge entire stake o 7.5 Delayed salary 7.5.1 Aug 2011 7.5.2 Oct 2011 7.5.3 Nov 2011 7.5.4 Dec 2011 7.5.5 Jan 2012 o 7.6 Fuel (ATF) Dues o 7.7 Aircraft lease rental default o 7.8 Airports Authority of India (AAI) default o 7.9 Net worth eroded & going concern o 7.10 Bank account frozen o 7.11 Service Tax o 7.12 Legal action by Excise & Customs o 7.13 Winding up petition o 7.14 TDS / Income tax default

7.15 Aircraft Grounded 7.16 Bank arrears 7.17 NPA (Non-performing asset) 7.18 Oneworld alliance stalled 8 See also 9 References
o o o o

10 External links

[edit] History
Kingfisher Airlines was established in 2003. It is owned by the Bengaluru based United Breweries Group. The airline started commercial operations in 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi.[11] It started its international operations on 3 September 2008 by connecting Bengaluru with London. Kingfisher Airlines Limited Type Public (BSE: KFA) Industry Transportation Founded 2003 Headquarters Mumbai, Maharashtra Area served Asia, Europe Dr. Vijay Mallya, CMD Sanjay Aggarwal, CEO A. Raghunathan, CFO Key people (Finance)

Hitesh Patel, EVP (Operations &

Engineering)

Services Revenue Subsidiaries Website

Airline catering & foodservice, aircraft ground handling and passenger transport 6,496 crore (US$1.43 billion) (201011)[12] Kingfisher Xpress flykingfisher.com

[edit] Operational performance

Kingfisher Airlines Statistics[citation needed] Year ended Passengers carried % Change Average load factor (%) April 2007 March 2008 12,414,336 61% April 2008 March 2009 10,850,359 12.6% 60% April 2009 June 2009 2,851,360 69%

[edit] Destinations
Main article: Kingfisher Airlines destinations Kingfisher Airlines serves 63 domestic destinations and 8 international destinations in 8 countries across Asia and Europe. Kingfisher's short haul routes are mostly domestic apart from some cities in South Asia, Southeast Asia and Western Asia. All short haul routes are operated on the Airbus A320 family aircraft. ATR 42s and ATR 72s are used mainly on domestic regional routes. Kingfisher has its medium, long-haul destinations in East Asia, Southeast Asia, and Europe. Its first long haul destination was London, United Kingdom which was launched in September 2008. It has plans to launch new long haul flights to cities in Africa, Asia, Europe, North America and Oceania with deliveries of new aircraft. All long haul routes are operated on the Airbus A330-200.

[edit] Codeshare agreement

Kingfisher has codeshare agreements with:

American Airlines (Oneworld)[13] British Airways (Oneworld)[14] Philippine Airlines[15]

[edit] Fleet
[edit] Current

Airbus A319 on runway of Rajiv Gandhi International Airport, Hyderabad

ATR 72-500

Airbus A320-200 taxiing at HAL Airport, Bangalore

Airbus A330-200 Kingfisher Airlines' fleet currently consists of ATR 42, ATR 72 and Airbus A320 family aircraft for domestic and short haul services and Airbus A330-200s for international long-haul services. The average age of its fleet as of January 2009 was 2.3 years. All ATR's and a few aircraft from the A320 family are used for Kingfisher Red service. Kingfisher's fleet consists of the following aircraft as of 15 August 2010: Kingfisher Airlines Fleet[16] Aircraft Airbus A319-100 Total Orders Options 3 10 Airbus A320-200 3 8 6 Airbus A321-200 2 Airbus A330-200 5 15 67 Passengers P 0 20 0 0 32 Y Total 14 4 11 4 17 4 18 0 11 9 144 134 174 180 151 2 dry leased. 199 217 Deliveries through 2015 11 dry-leased Deliveries through to 2016 Notes All dry-leased

19 0 9 30 18

7 Airbus A350-800 Airbus A380-800 ATR 42-500 ATR 72-500 Total 2 17 8 64 5 5 92 5 20 25 0 TBA 0 800 48 66 72 0 48 0 66 0 72 Deliveries starting 2015 Deliveries starting 2014 All dry leased 15 new aircraft to be dry leased

[edit] New aircraft orders and deliveries

This article may need to be rewritten entirely to comply with Wikipedia's quality standards, as section. You can help. The discussion page may contain suggestions.
(December 2010)

On 21 July 2004, it signed a MoU with Airbus for four A320-200s with options for eight more[citation needed]. The first four A320-200s were leased from debis airfinance. On 23 February 2005, it signed a contract with Airbus for three Airbus A319-100s and firm orders for ten A320-200s with options for twenty more.[17] On 25 April 2005, it took the delivery of its first Airbus A320-200 aircraft[18] which was used to start operations in 9 May 2005. On 15 June 2005, it created history by becoming the first Indian airline to place orders for the Airbus A330, Airbus A350 and Airbus A380 aircraft. The order was for five A330-200s, five A350-800s and five A380-800s.[19] On 21 November 2005, it placed another order for thirty Airbus A320 family aircraft.[20] On 24 April 2006 at Hannover, it became the first Indian airline yet again to place orders for the Airbus A340 aircraft. The order was for five A340-500s.[21] However, these A340-500 orders were cancelled in 2008 due to worldwide economic recession which resulted in skyrocketing of petroleum prices across the world in July 2008. On 20 June 2007 at the 2007 Paris Airshow, it signed a MoU with Airbus for twenty Airbus A320 family aircraft, ten Airbus A330-200s, five Airbus A340-500s and fifteen Airbus A350800s.[22] The order for five A340-500s were converted to A330-200s in 2008 after the cancellation of the initial five A340-500 order which was placed in April 2006 at Hannover. On 14 July 2008, Kingfisher unveiled its first ever Wide-body aircraft, a Airbus A330-200 (registered VT-VJL) at the 46th Farnborough Airshow held in July 2008. Kingfisher's first Airbus A330-200 was widely billed (according to the airline's press release) as the best A330200 ever built by Airbus.[23]

Kingfisher Airlines new aircraft delivery schedule[24] Aircraft Airbus A320 family Airbus A330-200 Airbus A350-800/A380800 Total 201 201 201 201 201 Total 2 3 4 5 6 6 4 10 9 3 12 7 4 12 23 8 4 6 18 12 12 24 42 15 30 87

[edit] Services
[edit] Cabin classes
[edit] Domestic
[edit] Kingfisher First

The domestic Kingfisher First seats have a 48 inch seat pitch and a 126 degree seat recline. There are laptop and mobile phone chargers on every seat. Passengers can avail of the latest international newspapers and magazines. There is also a steam ironing service on board Kingfisher First cabins. Every seat is equipped with a personalised IFE system with AVOD which offers a wide range of Hollywood and Bollywood movies, English and Hindi TV programmes, 16 live TV channels and 10 channels of Kingfisher Radio. Passengers also get BOSE noise cancellation headphones. Domestic Kingfisher First is only available on selected Airbus A320 family aircraft.
[edit] Kingfisher Class

The domestic Kingfisher Class has 32-34 inch seat pitch. Every seat is equipped with personal IFE systems with AVOD on-board the Airbus A320 family aircraft. As in Kingfisher First, passengers can access movies, English and Hindi TV programmes, a few live TV channels powered by DishTV, and Kingfisher Radio. The screen is controlled by a controller-console on the seat armrest. Earcup headphones are provided free of cost to all passengers. The default channel shows, alternating every few seconds, the aeroplane's ground speed, outside temperature, altitude, distance and time to destination, the position of the aircraft on a graphical map, and one or more advertisements. Passengers are served meals on most flights. Before take-off, passengers are served bottled lemonade.

Economy class meal on-board a Kingfisher Airlines domestic flight

[edit] Kingfisher Red

Main article: Kingfisher Red

After Kingfisher Airlines acquired Air Deccan, its name was changed to Simplifly Deccan and subsequently to Kingfisher Red. Kingfisher Red is Kingfisher Airline's low-cost class on domestic routes. A special edition of Cine Blitz magazine is the only reading material provided. Kingfisher Airlines is the first airline in India to extend its King Club frequent flyer program to its low-cost carrier as well. Passengers can earn King Miles even when they fly Kingfisher Red, which they can redeem for free tickets to travel on Kingfisher Airlines or partner airlines. [edit] International
[edit] Kingfisher First

The international Kingfisher First has full flat-bed seats with a 180 degree recline, with a seat pitch of 78 inches, and a seat width of 20-24.54 inches.[25] Passengers are given Merino wool blankets, a Salvatore Ferragamo toiletry kit, a pyjama to change into, five-course meals and alcoholic beverages. Also available are in-seat massagers, chargers and USB connectors. Every Kingfisher First seat has a 17 inch widescreen personal television with AVOD touchscreen controls and offers 357 hours of programming content spread over 36 channels, including Hollywood and Bollywood movies along with 16 channels of live TV, so passengers can watch their favorite TV programmes live. There is also a collection of interactive games, a jukebox with customisable playlists and Kingfisher Radio. Passengers are given BOSE noise cancellation headphones. The service on board the Kingfisher First cabins includes a social area comprising a full-fledged bar staffed with a bartender, a break-out seating area just nearby fitted with two couches and bar stools, a full-fledged chef on board the aircraft and any-time dining. A turn-down service

includes the conversion of the seat into a fully flat bed and an air-hostess making the bed when the passenger is ready to sleep. Both Kingfisher First and Kingfisher classes feature mood lighting on the Airbus A330-200 with light schemes corresponding to the time of day and flight position.
[edit] Kingfisher Class

The international Kingfisher Class seats offer a seat pitch of 34 inches, a seat width of 18 inches and a seat recline of 25 degrees (6 inches). Passengers get full length modacrylic blankets, full size pillows and meals. Each Kingfisher Class seat has a 10.6 inch widescreen personal television with AVOD touchscreen controls. The IFE is similar to that of the international Kingfisher First class. It can also be controlled by a detachable remote-control console fitted in the armrest. This device can be used to control the IFE, reading-lights, play games and even has a credit-card swipe for shopping on Kingfisher's 'Air Boutique'. It also has a facility for sending text-messages, though the service isn't provided by Kingfisher. [edit] Cargo
[edit] Kingfisher Xpress

Further information: Kingfisher Xpress Kingfisher Xpress is a new Door-to-Door cargo delivery service from Kingfisher Airlines. Kingfisher Xpress same day service will be India's first and only same day delivery by air service.

[edit] In-flight entertainment

Kingfisher's IFE system is the Thales TopSeries i3000/i4000 on-board the Airbus A320 family aircraft, and Thales TopSeries i5000 on-board the Airbus A330 family aircraft provided by the France-based Thales Group.[26] Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems on every seat even on domestic flights. All passengers were given a "welcome kit" consisting of goodies such as a pen, facial tissue and headphones to use with the IFE system. Now, passengers of Kingfisher class are not given "welcome kits" but, as mentioned earlier, a complimentary bottle of lemonade and earphones for use with the IFE are still given. The inflight magazines are special editions of magazines owned by Mallya's media publishing house (VJM Media) viz. Hi! Blitz for domestic flights and Hi! Living for international flights. Initially, passengers were able to watch only recorded TV programming on the IFE system, but later an alliance was formed with Dish TV to provide live TV in-flight.[27] And in a marked departure from tradition, Kingfisher Airlines decided to have an on-screen safety demonstration using the IFE system; however the conventional safety briefing by the flight attendants still exists on many flights.

[edit] King Club

The Frequent-flyer program of Kingfisher Airlines is called the King Club in which members earn King Miles every time they fly with Kingfisher or its partner airlines, hotels, car rental, finance and lifestyle businesses. There are four levels in the scheme: Red, Silver,Gold and Platinum levels. Members can redeem points for over a number of schemes. Platinum, Gold and Silver members enjoy access to the Kingfisher Lounge, priority check-in, excess baggage allowance, bonus miles, and 3 Kingfisher First upgrade vouchers for Gold membership. Platinum members get 5 upgrade vouchers.

[edit] Kingfisher Lounge

Kingfisher Lounges are offered to Kingfisher First passengers, along with King Club Silver and King Club Gold members. Lounges are located in:

Bangalore International Airport Chennai International Airport Chhatrapati Shivaji International Airport (Mumbai) Cochin International Airport (Kochi) Indira Gandhi International Airport (Delhi) London Heathrow Airport Netaji Subhash Chandra Bose International Airport (Kolkata) Rajiv Gandhi International Airport (Hyderabad)

[edit] Awards and achievements

Adrian Sutil is pursued by Lewis Hamilton at the 2010 Malaysian GP. Kingfisher is a sponsor of Force India

Kingfisher Airlines frequent flyer programme, King Club has won Top Honours at the 21st Annual Freddie Awards in the Japan, Pacific, Asia and Australia region. o King Club has won the Freddie Awards 2008 in the following categories:

Best Bonus Promotion Best Customer Service Best Member Communications (First Runner-up) Best Award Redemption (First Runner-up) Best Elite Level (Second Runner-up) Best Website (Second Runner-up) Program of the Year (Second Runner-up) Kingfisher Airlines has received three global awards at the Skytrax World Airline Awards 2010 o Named Best Airline In India / Central Asia; Best Cabin Crew Central Asia. o Kingfisher RED named Best Low Cost Airline in India / Central Asia. NDTV Profit Business Leadership Award for Aviation. India's only 5 Star airline, rated by Skytrax and 6th airline in the world. Rated India's Second Buzziest Brand 2008 by The Brand Reporter. Ranked amongst India's Top Service Brands of 2008 by Pitch Magazine. Voted as India's Favourite Airline. Rated as Asia Pacific's Top Airline Brand. Brand Leadership Award. Economic Times Avaya Award 2006 for Excellence in Customer Responsiveness. India's No. 1 Airline in customer satisfaction by Business World. Rated amongst India's most respected companies by Business World. Rated amongst India's 25 Innovative Companies by Planman Media in 2006. The Best Airline" and "India's Favourite Carrier' in a Survey conducted by IMB for The Times Of India. Best New Domestic Airline for Excellent Services and Cuisine by Pacific Area Travel Writers Association (PATWA). Service Excellence 2005-2006 for a New Airline by Skytrax. Ranked Third in the survey on India's Most Successful Brand launch of 2005 under the Brand Derby Survey conducted by Business Standard. Buzziest Brands of 2005 by agencyfaqs and The Brand Reporter. Rated amongst the Top Ten Internet Advertisers by Yahoo. Rated amongst the top ten in the Best Television Commercial Jingles by NDTV. Best New Airline of the Year Award for 2005 by Centre for Asia Pacific Aviation (CAPA) Award in the Asia-Pacific and Middle East region. Listed in the top 100 most trusted brand in The Brand Trust Report.

Accoding to Kingfisher[28]

[edit] Accidents and incidents

On 10 November 2009, Flight 4124 operated by ATR 72-212A VT-KAC, skidded off the runway after landing at Chhatrapati Shivaji International Airport. The aircraft suffered substantial damage, but all 46 passengers and crew escaped unharmed.[29] In November 2010, the Directorate General of Civil Aviation released its final report into the accident. It revealed that the cause of the accident was pilot error, with the aircraft landing at too high a speed and too far down Runway 27A, which was the designation given to Runway

27 whilst it was being operated at a reduced length due to the closure of Runway 14/32 for maintenance.[30]

[edit] Financial turmoil

[edit] Mounting Losses
Since inception, Kingfisher Airlines is yet to post profit on annual & total cost basis.[31] Following are YoY financial results of Kingfisher Airlines, all numbers are in Indian rupee (INR) crore except EPS, which is in INR.[32] # 01 02 03 04 05 06 07 Total From To Months Total Income Cost Net Profit EPS Apr-05 Jun-06 15 1,352 1,689 -337 -68 Jul-06 Jun-07 12 2,142 2,562 -420 -42 Jul-07 Mar-08 09 1,546 1,734 -188 -11 Apr-08 Mar-09 12 5,577 7,186 -1,609 -55 Apr-09 Mar-10 12 5,271 6,918 -1,647 -54 Apr-10 Mar-11 12 6,496 7,523 -1,027 -16 Apr-11 Sep-11 06 3,410 4,142 -732 n/a 78 25,793 31,754 -5,960

[edit] Debt Recast

In Nov 2010, Kingfisher Airlines has completed restructuring 8,000 crore (US$1.76 billion) debt, with all 18 lenders agreeing to cut interest rates and convert part of loans to equity.[33] Lenders have converted 650 crore (US$143 million) debt into preference shares which will be converted into equity when the airline lists on the Luxembourg Stock Exchange by selling global depositary receipts (GDR). Shares will be converted into ordinary equity at the price at which the GDRs are sold to investors. Besides the 1,400 crore (US$308 million) debt which will be converted into preference shares, another 800 crore (US$176 million) debt has been converted into redeemable shares for 12 years.[33] Airline's average interest rate is now down to 11%, helping the airline save 500 crore (US$110 million) crore every year on interest cost. Consortium of banks was represented by SBI Capital Markets. Kingfisher Airlines Ltd has informed BSE that the Board of Directors of the Company at its meeting held on November 25, 2010, has approved a Debt Recast Package (DRP) with lending banks, following a one-time relaxation in restructuring guidelines sanctioned by the Reserve Bank of India. The salient features of the DRP include:
1. Conversion of debt of up to 1,355 crore (US$298.1 million) from lenders into share

capital.[33]

2. Conversion of debt of up to 648 crore (US$142.56 million) from promoters into share

capital. 3. Reschedulement of repayment of the balance debt to lenders over 9 years with a moratorium of 2 years. 4. Reduction in interest rates. 5. Sanction of additional fund and non-fund based facilities by the lenders. While Board sanction has been received from several lenders, the same is shortly expected from the others. The DRP is subject to execution of necessary documentation. In order to give effect to the DRP mentioned above, the Board of Directors at its Meeting held on November 25, 2010, has resolved as follows, subject to the above approvals and subject to the approval of the shareholders and such other regulatory and other approvals as may be required[33]:
1. To issue and allot up to 57,50,00,000 (Fifty Seven Crores Fifty Lakhs only) 8%

2.

3.

4.

5.

6.

7.

Redeemable Cumulative Preference Shares of 10 (US$0.22) each redeemable at par at the end of 12 years, to the members of the consortium of lenders in consideration of the extinguishment of the amount due to the members of the consortium of lenders under various loan facilities availed by the Company. To issue and allot up to 78,00,00,000/- (Seventy Eight Crores only) 7.5% Compulsorily Convertible Preference Shares of 10 (US$0.22) each to the members of the consortium of lenders in consideration of the extinguishment of the amount due to the members of the consortium of lenders under various loan facilities availed by the Company. To amend the terms and conditions of 97,00,000 (Ninety Seven Lakhs only) 6% Redeemable Preference Shares of 100 (US$2.2) each issued to United Breweries (Holdings) Ltd. (Promoter Company), inter alia, to convert these shares to 9,70,00,000 (Nine Crores Seventy Lakhs only) 6% Compulsorily Convertible Preference Shares of 10 (US$0.22) each. To issue and allot up to an aggregate of 64,80,00,000/- (Sixty Four Crores Eighty Lakhs only) 7.5% Compulsorily Convertible Preference Shares of 10 (US$0.22) each to United Breweries (Holdings) Ltd. and to Kingfisher Finvest India Ltd. (Promoter Companies) in consideration of the extinguishment of the amount due to United Breweries (Holdings) Ltd. and Kingfisher Finvest India Ltd., from the Company. To issue and allot up to 2,00,00,000/- (Two Crores only) 8% Optionally Convertible Debentures of 100 (US$2.2) each to Star Investments Ltd. in consideration of the extinguishment of the amount due to Star Investments Ltd. from the Company. To issue and allot up to 3,00,00,000/- (Three crores only) 8% Optionally Convertible Debentures of 100 (US$2.2) each to Margosa Consultancy Pvt. Ltd. in consideration of the extinguishment of the amount due to Margosa Consultancy Pvt. Ltd. from the Company. To issue and allot up to 3,00,00,000/- (Three Crores only) 8% Optionally Convertible Debentures of 100 (US$2.2) each to Redect Consultancy Pvt. Ltd. in consideration of the extinguishment of the amount due to Redect Consultancy Pvt. Ltd. from the Company.[33]

[edit] Second Debt Recast Kingfisher Airlines, in Nov 2011 was attempting for a second debt recast. However second debt recast has been ruled out by Government of India. Minister of state for Finance made a statement on 09th Dec 2011.[34]

[edit] Brand Pledged

Kingfisher Airlines has pledged its brand as collateral with its lender consortium for 4,100 crore (US$902 million). The brand valuation was done by Grant Thorton in 2010.[34] Reportedly the Brand has been valued and loan raised worth triple carriers market value.[35]

[edit] Founders pledge entire stake

On July 6, 2011, pursuant to requirements prescribed under the Debt Recast Package Kingfisher Airlines' founder companies, United Breweries (Holdings) Ltd and Kingfisher Finvest Ltd, have pledged their entire stake in the airline with certain of its lenders.[36] United Breweries (Holdings) Ltd held 199,598,555 shares (representing 40.1% of total outstanding shares) in the airline and has pledged all the shares to lenders. At the same time, Kingfisher Finvest Ltd held 63,478,570 shares (representing 12.75% of total outstanding shares) has pledged its entire holding to the lenders.[37]

[edit] Delayed salary

[edit] Aug 2011 Kingfisher Airline has staff strength of 6,000 and spends 58 crore (US$12.76 million) on salaries a month. According to the first quarter financial results, it has 173.66 crore (US$38.21 million) under the employees cost head, which has increased from 163.40 crore (US$35.95 million) during the same quarter last year. Kingfisher Airlines has delayed salaries (for Jul 2011) of its employees in Aug 2011. The management stated that it does not have the money, and has not given any date for the payment. Kingfisher airline had earlier stated that due to the bank strike, the salaries could not be processed. Employees were paid salaries on the 7th of every month. Earlier, the company used to pay on the 31st.[38] [edit] Oct 2011 In the month of Oct 2011, salary payment for the month of Sep 2011 had been delayed by Kingfisher Airlines. Salaries were normally credited to the accounts of its employees on the 7th day of every month. It has also been alleged that the tax company deducted from the salaries wasnt being paid to the tax department.[39]

[edit] Nov 2011 Kingfiher airline could not pay salaries (on time) to it staff in the month of November 2011.[40] [edit] Dec 2011 The airline could not pay salaries to it staff for the month of December 2011. In protest, Kingfisher pilots started making in-flight announcements citing "It is their sense of duty towards the guest that is making them fly despite not being paid salaries for the past two months".[41] Pilots have also said that they plan to wear black armbands while reporting for work. [edit] Jan 2012 For the fourth month in succession, Kingfisher has delayed staff salaries. In a report to DGCA on 09th Jan 12, Kingfisher had stated that it has paid past (salary) dues to 60% of its employees and that by 31st Jan 12, payment of December 2011 salary for all its employees will be done.[42]

[edit] Fuel (ATF) Dues

HPCL: In Jul 2011, Hindustan Petroleum Corporation Limited (HPCL) stopped the fuel (ATF) supplies for about two hours to Kingfisher airlines owing to the non-payment of dues. Situation was later resolved.[43] In the past several years, Kingfisher airlines has had trouble paying their fuel bills. BPCL: Bharat Petroleum Corporation in 2009 had filed a case against Kingfisher airlines for non-payment of dues. High court in an order said that the entire amount ( 245 crore (US$53.9 million)) had to be paid by Nov 2010 and the airline paid it in instalments.[44]

[edit] Aircraft lease rental default

Since 2008, it has been reported that Kingfisher Airlines has been unable to pay the aircraft lease rentals on time.

GECAS: In Nov 2008, GE Commercial Aviation Services threatened to repossess 04 leased planes in lieu of default. Kingfisher Airlines initially denied that it missed the payments.[45][46] GECAS had filed a complaint with DGCA saying Kingfisher had defaulted on rentals for four A320 aircraft, and sought repossession of the planes.[47] In Jan 2009, The Karnataka High Court rejected petition by Kingfisher Airlines to restrain GECAS from taking any step to deregister and repossess the 04 aircraft in dispute. As a result, Kingfisher had to return the A320 aircraft to GECAS.[48] DVB: In Jul 2010, DVB Aviation Finance Asia Ltd (a lessor from Singapore), sued Kingfisher Airlines for lease rental default. Case was filed in a UK court on Jul 16, 2010 after Kingfisher did not pay for three month lease rental for A320 aircraft it leased from DVB.[49]

[edit] Airports Authority of India (AAI) default

In a written reply to the Rajya Sabha, Civil Aviation Minister Vayalar Ravi informed that Kingfisher Airlines did not settle dues on a regular fortnightly basis and that their exceeded the security deposit / bank guarantees available with AAI. As per the details provided, as on June 30, 2011, Kingfisher Airlines owes 208.06 crore (US$45.77 million).[50]

[edit] Net worth eroded & going concern

In Sep 2011, the Chairman & Managing Director of Kingfisher Airlines made following disclosure to BSE; The Company has incurred substantial losses and its net worth has been eroded. However, having regard to improvement in the economic sentiment, rationalization measures adopted by the Company, fleet recovery and the implementation of the debt recast package with the lenders and promoters including conversion of debt into share capital, these interim financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities"[51] This filing was widely covered by Indian and international print and electronic media and analysts. It was stated by analysts and media that the company needs capital infusion to remain viable and this has pushed shares to near historic lows.[52] Kingfisher Airlines Lenders later stated that they consider that company is viable.[53] On 15 November 2011 the airline released poor financial results, indicating that it was "drowning in high-interest debt and losing money". Mallya indicated that his solution was for the government to reduce fuel and other taxes. The government was engaged in assessing whether to bail out the company and other airlines or let market forces determine which ones survive.[54]

[edit] Bank account frozen

In December 2011, for the second time in two months, Kingfisher's bank accounts were frozen by the Mumbai Service Tax department for non-payment of dues. Kingfisher Airlines owes 70 crore (US$15.4 million) to the service tax department.[55] Indian tax body also stated that Kingfisher Airlines is delinquent[56] As response, Dr. Vijay Mallya called on the Chairman of Central Board of Excise and Customs and offered to pay up the dues by 13 Dec 11[57] Kingfisher bank accounts were unfrozen on 14th Dec 11.[58]

[edit] Service Tax

As on 10th Jan 2012, Kingfisher Airlines has service tax arrears of 60 crore (US$13.2 million).Finance Ministry has given a concession to Kingfisher and instructed them to pay the dues by 31st Mar 2012. In Jan 2012, Kingfisher paid 20 crore (US$4.4 million) towards its dues for December 2011 and part of the arrears.[59]

[edit] Legal action by Excise & Customs

On 9 December 2011, S.K. Goel, chairman, Central Board of Excise and Customs (CBEC) announced that CBEC is considering legal action against Kingfisher for not paying service tax.[34]

[edit] Winding up petition

Due non-payment, several Kingfisher's vendors had filed winding up petition with the High Court. As on Nov 2011, winding up petition of seven creditors was pending before the Bangalore High Court.[60] In the past Lufthansa Technik & Bharat Petroleum Corporation Limited (BPCL) had also filed winding up petition against Kingfisher Airlines[61]

[edit] TDS / Income tax default

Kingfisher Airlines, for the financial year 2010-2011 & 2011-2012 had not deposited 153 crore (US$33.66 million) TDS (Tax deducted at source), that the company deducted from its employees.[62] Minister of State for Finance S S Palanimanickam advised the Rajya Sabha that proceedings have been initiated for FY 2010-2011 to crystallize the default amount, levy interest on delayed payment and take further statutory action.[62]

[edit] Aircraft Grounded

Kingfisher Airlines has grounded 15 out of 66 aircraft in its fleet as it was unable to meet the maintenance and overhaul expenses.[63]

[edit] Bank arrears

Kingfisher Airlines had not paid some bankers (Lenders) as per the Debt Recast Package (DRP) with lending banks. Till the end of Dec 2011, the arrears were estimated to be 260 crore (US$57.2 million) to 280 crore (US$61.6 million). Lenders hence had told Kingfisher Airlines to clear its dues before they can release any more money sought by the Airline. Ravi Nedungadi, chief financial officer of UB Group however said that the arrears were 180 crore (US$39.6 million).[64] If arrears were not paid in time (Dec 2011); Kingfisher Airlines would automatically have been treated as NPA, (Non-performing asset).[65] On the last working day of the third quarter of financial year 2011-2012, Kingfisher Airlines made one month interest amount to the banks; thus saving the account from turning a nonperforming asset[66]

[edit] NPA (Non-performing asset)

State Bank of India (SBI) on 5th Jan 2012 declared Kingfisher Airlines a NPA (Non-performing asset). SBI is largest credtor and the leader of the consortium of banks in the DRP (Debt Recast Package) and has an exposure of 1,457.78 crore (US$320.71 million).[67] By Feb 2012, Kingfisher has been decleared NPA by following banks;[68][69]

SBI Bank of Baroda PNB IDBI Central bank BOI Corporation Bank

[edit] Oneworld alliance stalled

On 7 June 2010 Kingfisher became a member elect of the Oneworld airline alliance when it signed a formal membership agreement. Kingfisher confirmed on the 20th December 2011 that it will join the Oneworld airline alliance on February 10, 2012. Kingfisher would have been the first Indian carrier to join one of the big airline alliances[70]. However on February 03, 2012, owing to bad financial situation and two days after IATA clearing house suspended Kingfisher airlines; the airlines participation to Oneworldhas been put on hold.