Cipango
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Kingfisher: Whats Happening Now?

Sat May 12, 2012 9:40 pm

Well after all the hype of an imminent shut down, things have been quiet for the last couple of months.

All "long haul" international operations such as DEL/BOM-LHR and DEL-SIN/BKK/HKG have ceased, aswel as a few domestic routes.

My question now is, have Kingfisher begun to stabilise or is it still a sinking Titanic?

What is their fleet size now after the aircrafts have been returned to lessor? Did they lose the A330's?

Have the staff been paid since? They hadn't been paid for a few months during the "crisis".


Ill turn it over to you all to discuss the current situation of IT.



Cipango.
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lightsaber
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RE: Kingfisher: Whats Happening Now?

Sat May 12, 2012 10:53 pm

Quoting cipango (Thread starter):
My question now is, have Kingfisher begun to stabilise or is it still a sinking Titanic?

It is more the debt:
"Kingfisher has a debt of Rs 7,057.08 crore. Its net loss widened to Rs 444.27 crore for the quarter ended December 31, 2011 from Rs 253.69 crore in the October-December quarter of the last fiscal."
http://www.moneycontrol.com/news/bus...d-breweries-subsidiary_703087.html

Can IT service *that* much debt with their reduced operations? I suspect   .

Quoting cipango (Thread starter):
Have the staff been paid since?

As we Americans say, "the check is in the mail:"
"after an assurance from the airline's chairman and managing director Vijay Mallya that their salaries would be paid by next Tuesday."

http://www.domain-b.com/aero/airlines/20120512_vijay_mallya.html

I'll let everyone place bets on how likely that is to truly happen...   

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aviasian
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RE: Kingfisher: Whats Happening Now?

Sat May 12, 2012 11:13 pm

Apparently pilots are calling in sick earlier this week as management failed to pay January 2012 salaries ...

The saga continues.

For the benefit of those of us not familiar with India, can someone explain the unit "crore"? How does one convert Rupees 444.27 crore into a foreign currency such as US Dollars?

KC Sim
 
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Polot
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RE: Kingfisher: Whats Happening Now?

Sat May 12, 2012 11:23 pm

Quoting aviasian (Reply 2):
For the benefit of those of us not familiar with India, can someone explain the unit "crore"? How does one convert Rupees 444.27 crore into a foreign currency such as US Dollars?

Crore is just 10,000,000 (ten million). So 444.27 crore is equal to 4,442,700,000 rupees, or a little less than $83 million.
 
aircanadaa330
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RE: Kingfisher: Whats Happening Now?

Sat May 12, 2012 11:35 pm

Quoting Polot (Reply 3):
Crore is just 10,000,000 (ten million). So 444.27 crore is equal to 4,442,700,000 rupees, or a little less than $83 million.

so if I understand this correctly.... IT had a loss of $83 million?
Cheers;
 
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Polot
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RE: Kingfisher: Whats Happening Now?

Sat May 12, 2012 11:40 pm

Quoting AirCanadaA330 (Reply 4):
so if I understand this correctly.... IT had a loss of $83 million?

Yes. Doesn't really seem like a lot until you consider the size of the airline and that they have over $1 billion dollars in debt.
 
aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 1:52 am

I think Kingfisher is gone. They've gone past the point of no return. I think it's a miracle they are even around today - most people were predicting that they'd have gone under back in February/March/April...

They are operating a truncated schedule somewhat reliably (reasonably on-time), but their product is in shambles and they are filling their planes with lower yields than even the LCCs.

This can't go on forever.

Quoting aviasian (Reply 2):
Apparently pilots are calling in sick earlier this week as management failed to pay January 2012 salaries ...

Actually, November and December 2011 salaries were only paid partially, so their demand was to get those in full first.
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lightsaber
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 2:57 am

Quoting aeroblogger (Reply 6):

I think Kingfisher is gone. They've gone past the point of no return. I think it's a miracle they are even around today

Unless quite a bit of debt is traded for equity, I do not see how they can survive even short term. In the long term, 9W and Indigo are going to eat their lunch. I simply do not see their niche under their cost structure.

Quoting aeroblogger (Reply 6):
they are filling their planes with lower yields than even the LCCs.

IT has to somehow get back into the good graces of the travel agents. I simply do not see how they will do that.

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aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 3:11 am

Quoting lightsaber (Reply 7):

IT has to somehow get back into the good graces of the travel agents. I simply do not see how they will do that.

They can't even sell through travel agents until they themselves into the BSP again... Right now, I think they are only selling through their website/call center/booking offices.
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 3:25 am

Quoting aeroblogger (Reply 8):
They can't even sell through travel agents until they themselves into the BSP again...

Was IT also kicked out of another system? I'm forgetting the details, but they seem to have been distanced from the salespeople as far as possible...

Lightsaber
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aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 3:36 am

Quoting lightsaber (Reply 9):

Was IT also kicked out of another system?

They've been suspended from the ICH, BSP, CASS
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 7:41 am

What happens to the deposits that were given to OEM's for planes on order? I don't think the have any orders with Boeing but I do know that they had a handful of A380's on order. Does Airbus absorb the deposit even if its widely known Kingfisher wont ever take delivery of those from frames?
 
aviasian
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 10:36 am

Thanks Polot for the clarifcation re: the crore. Now it is totally clear to me.

If Kingfisher is still in such a dire situation, is it still sponsoring the Formula One Grand Prix Force India team? That kind of sponsorship is extremely costly and VJ Mallya often jets around to each race city in his private jet.

Should it not be more appropriate (and morally responsible) to use whatever fund available to pay Kingfisher's employees (not just the pilots but the other staff as well) rather than indulge in all the premium travel and entertainment at the F1 Grand Prix parties.

KC Sim
 
iFlyLOTs
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 12:05 pm

Quoting aviasian (Reply 12):
If Kingfisher is still in such a dire situation, is it still sponsoring the Formula One Grand Prix Force India team? That kind of sponsorship is extremely costly and VJ Mallya often jets around to each race city in his private jet.

I'm not certain but I think that VJM can just say that its the beer now sponsoring the F1 team and no longer the airline if asked by F1 officials. But he also owns the team so he can put whatever he want on the car too, be it the beer or the airline name.
"...stay hungry, stay foolish" -Steve Jobs
 
aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 12:22 pm

Quoting iFlyLOTs (Reply 13):

I'm not certain but I think that VJM can just say that its the beer now sponsoring the F1 team and no longer the airline if asked by F1 officials. But he also owns the team so he can put whatever he want on the car too, be it the beer or the airline name.

It was the beer company which was always sponsoring the F1 team. Kingfisher Airlines was never involved.
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iFlyLOTs
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 12:42 pm

Quoting aeroblogger (Reply 14):
It was the beer company which was always sponsoring the F1 team. Kingfisher Airlines was never involved.

This is from their current car the VJM05

it says Fly Kingfisher on the nose of the car, I personally don't know (not legal for me to drink yet) but I don't think you can fly a beer.   

But this poses the question, if Kingfisher does go under (the airline branch) then will they change the nose to say "Drink Kingfisher"?
"...stay hungry, stay foolish" -Steve Jobs
 
sankaps
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 1:05 pm

It is just surrogate advertising, since one cannot advertise alcohol in India. So what I think is really happening is Kingfisher beer is paying for the ad, with the word "Fly" inserted to skirt the regulations.

VJM is caught between a rock and a hard place. He does not want KF to go under as UB corporate guarantees will then get invoked, which will not be good for UB. But he does not have the funds or goodwill to keep it going much longer. So what he is hoping for is a miracle, in the form of an investor who has more money than brains to bail him out!
 
iFlyLOTs
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 1:17 pm

Quoting sankaps (Reply 16):
It is just surrogate advertising, since one cannot advertise alcohol in India. So what I think is really happening is Kingfisher beer is paying for the ad, with the word "Fly" inserted to skirt the regulations.

For what its worth, it says Kingfisher Premium on the engine cover, which is the beer.

Quoting sankaps (Reply 16):
So what he is hoping for is a miracle, in the form of an investor who has more money than brains to bail him out!

Good luck to him on that one..

Wasn't there talk of IAG looking at investing in them? Was that a pipe dream by someone or was that just pushed off/thrown out by the BMI merger?
"...stay hungry, stay foolish" -Steve Jobs
 
aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 1:45 pm

Quoting sankaps (Reply 16):

VJM is caught between a rock and a hard place. He does not want KF to go under as UB corporate guarantees will then get invoked, which will not be good for UB. But he does not have the funds or goodwill to keep it going much longer. So what he is hoping for is a miracle, in the form of an investor who has more money than brains to bail him out!

  

Quoting iFlyLOTs (Reply 15):

it says Fly Kingfisher on the nose of the car, I personally don't know (not legal for me to drink yet) but I don't think you can fly a beer.

Well, I guess I'm mistaken. Either way, it's UB group paying for the advertising, not Kingfisher Airlines itself.
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sankaps
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 1:53 pm

Quoting iFlyLOTs (Reply 17):
For what its worth, it says Kingfisher Premium on the engine cover, which is the beer.

Actually, not that simple. UB sells bottled water branded Kingfisher Premium as well, again to skirt the regulations. So they will say it is the bottled water they are advertising. All booze companies in India do this.
 
sankaps
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 2:11 pm

Quoting iFlyLOTs (Reply 17):
Wasn't there talk of IAG looking at investing in them? Was that a pipe dream by someone or was that just pushed off/thrown out by the BMI merger?

It is quite possible IAG sniffed around, but anyone who buys them has to assume $1Bn in debt. Even if they re-negotiate with creditors, convert some debt to equity, etc, there will probably still be $300-500M in debt to assume.

You may find a buyer to do that, and essentially buy the airline for $1 (like Tony F bought Air Asia for 1 ringgit) and assume the debt, but you can be sure they'd only do that if they get Mallya and his team out of the picture and they have some confidence creditors will play ball, as well as belief there is a business case for three largish full-service int'l carriers in India (9W, AI, and IT).

If IAG feels all of the above is true, then they may end up buying the airline, but will have to find an Indian partner to buy 51% of the stake. And then they'd have to be willing to fund losses until a turnaround takes place, as well as fund new aircraft and asset purchases to rebuild the fleet, pay for pending heavy checks, fund employee severances, and so forth.

So a tall order, one that can only be fulfilled by an entity with very deep pockets and high confidence. May be cheaper to buy another airline (Spice? Go?) and use that as the vehicle for India market participation instead.
 
JOYA380B747
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 2:17 pm

Quoting sankaps (Reply 20):
If IAG feels all of the above is true, then they may end up buying the airline, but will have to find an Indian partner to buy 51% of the stake.

If at all, Can Tata feature in this stake-buying? I'm confused and I never read what exactly the Govt changed in laws years back to prevent Tata to buy AI, but what about now? Or has Tata just given up on commercial Indian aviation?
If it wasn't for AI and those money mongers sitting in the parliament, 9W would have been as big as SQ...:(
 
sankaps
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 2:33 pm

Quoting JOYA380B747 (Reply 21):
If at all, Can Tata feature in this stake-buying? I'm confused and I never read what exactly the Govt changed in laws years back to prevent Tata to buy AI, but what about now? Or has Tata just given up on commercial Indian aviation?

I think it would be much easier for the Tatas to start a new airline than to assume 51% of a $1Bn debt! 5 years domestic-only restriction is not that bad, especially since domestic is more profitable than international these days.
 
aeroblogger
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RE: Kingfisher: Whats Happening Now?

Sun May 13, 2012 2:44 pm

Quoting JOYA380B747 (Reply 21):

If at all, Can Tata feature in this stake-buying? I'm confused and I never read what exactly the Govt changed in laws years back to prevent Tata to buy AI, but what about now? Or has Tata just given up on commercial Indian aviation?

When did GoI prevent Tata? Other than back in the 90s (where 9W lobbied against the Tatas opening an airline), Tata has shown no interest.
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