Friday, 11 November 2011

Kingfisher Airlines heading for business turbulence

Kingfisher Airlines look likely to be in business trouble after its shares slumped 18 percent to an all time low today. The airline has continued to cancel flights and reports suggest that lease companies were planning to take planes back from the airline.

Todays news comes six weeks after Kingfisher decided to stop its low cost service Kingfisher Red due to it having an unviable business plan. The services that remain in place are based on full fare seats and not the heavily discounted model that it had previously been run on. This has been put in business jargon by Kingfisher Chairman Vijay Mallya who said: 'No shutdown, only ensuring loss minimization by a flight rationalization and enhanced revenue through reconfiguration of aircraft.'

The airline has never made a profit since it began in 2005 and had tried to receive private investment in 2008 and 2009 but failed to attract sufficient interest. It appears that the he only way out for Kingfisher would be to sell a stake in the carrier to another airline which is against currently against Indian law. Despite this, India's industry secretary secretary said last month that the government is likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers.

Fancy it Mr. O'Leary?