KINGIFISHER AIRLINES A Summary

Introduction
Kingfisher Airlines has been one of the most ambitious entries into the aviation industry and a significant part of Indias Growth story. Its head office is Kingfisher House in Vile Parle (East), Mumbai. Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. Kingfisher Airlines is one of six airlines in the world to have a 5-star rating from Skytrax, along with Asian Airlines, Cathay Pacific, Malaysia Airlines, Qatar Airways and Singapore Airlines. Kingfisher operates more than 375 daily flights to 71 destinations, with regional and long-haul international services. In May 2009, Kingfisher Airlines carried more than a million passengers, giving it the highest market share among airlines in India. Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, in which Vijay Mallya also owns.

History
Kingfisher Airlines was established in 2003. It is owned by the Bengaluru based United Breweries Group. The airline started operations on 9 May 2005, following the lease of four Airbus A320-200aircrat. As of July 2007, Kingfisher started operating domestic routes. It started its international operations on 3rd September 2008 by connecting Bengaluru with London. The airline has announced plans to start flights to the USA with Airbus A340-500 and Airbus A380-800 aircraft. On 7 June 2010 Kingfisher became a member elect of the Oneworld airline alliance when it signed a formal membership agreement. A firm date to join the alliance will be announced once the implementation process is underway, it possibly may happen in.

Mounting Losses
Kingfisher Airlines was set up in 2003 but hasn't seen a single year of profit since it got listed in 2006. Today, accumulated losses stand at about Rs 8,200 crore and the money to pay for fuel, salaries and airport fees is running out, prompting Mallya to approach the government for a bailout. The company blames the government for its predicament the high cost of aviation fuel, the requirement to service non-profitable routes. But a few reports suggest otherwise, owing to Mallyas bad business model and incorrect decisions.

Debt Recast
In Nov 2010, Kingfisher Airlines has completed restructuring INR8,000 crore (US$1.62 billion) debt, with all 18 lenders agreeing to cut interest rates and convert part of loans to equity. Lenders have converted INR650 crore (US$131.82 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 INR1,400 crore (US$283.92 million) debt which will be converted into preference shares, another INR800 crore (US$162.24 million) debt has been converted into redeemable shares for 12 years. Airline's average interest rate is now down to 11%, helping the airline save INR500 crore (US$101.4 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 onetime 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 INR 1,355 crore (US$274.79 million) from lenders into share capital. 2. Conversion of debt of up to INR 648 crore (US$131.41 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. 1. To issue and allot up to 57,50,00,000 (Fifty Seven Crores Fifty Lakhs only) 8% Redeemable Cumulative Preference Shares of INR10 (US$0.2) 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. 2. To issue and allot up to 78,00,00,000/- (Seventy Eight Crores only) 7.5% Compulsorily Convertible Preference Shares of INR10 (US$0.2) each to the members of the consortium of

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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 INR100 (US$2.03) 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 INR10 (US$0.2) 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 INR10 (US$0.2) 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 INR100 (US$2.03) 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 INR100 (US$2.03) 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 INR100 (US$2.03) each to Redect Consultancy Pvt. Ltd. in consideration of the extinguishment of the amount due to Redect Consultancy Pvt. Ltd. from the Company.

Year Key Events

2005

The airline started operations on 9 May 2005, following the lease of four Airbus A320-200 aircraft.

2007

Kingfisher started operating domestic routes The boards of Kingfisher Airlines and Deccan Aviation decided to merge both the airlines. The name of the merged entity will most probably be Kingfisher Airlines.

2008

Deccan Aviation Ltd has informed that in terms of the Composite Scheme of Arrangement between Kingfisher Airlines Ltd, Deccan Aviation Ltd, Deccan Charters Ltd and their respective Shareholders and Creditors sanctioned by the Honble High Court of Karnataka vide Order date June 16, 2008, the name of the Company has changed from "Deccan Aviation Ltd" to "Kingfisher Airlines Ltd" w.e.f. September 05,

The company has announced that it has tied-up with Disney Publishing, a global publisher of children`s magazines and books, to provide specially-designed in-flight entertainment to children, reports agency sources. 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. GECAS had filed a complaint with DGCA saying Kingfisher had defaulted on rentals for four A320 aircraft, and sought repossession of the planes.

2009

Kingfisher Airlines Ltd appointed Mr. S R Gupte as an Additional Director of the Company. The company is targeting an equity infusion of around Rs 20 billion through strategic and financial investors and may even monetize aircraft order book over the time. 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. 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. Bharat Petroleum Corporation in 2009 had filed a case against Kingfisher airlines for nonpayment of dues. High court in an order said that the entire amount (INR245 crore (US$49.69 million)) had to be paid by Nov 2010 and the airline paid it in installments

2010

DVB Aviation Finance Asia Ltd 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.

2011

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. In the past several years, a Kingfisher airline has had trouble paying their fuel bills. 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. 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. It has also been alleged that the tax company deducted from the salaries wasnt being paid to the tax department.

Awards and achievements

Kingfisher Airlines frequent flyer programme, King Club has won Top Honors 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.

YoY financial results of Kingfisher Airlines, all numbers are in Indian rupee (INR) crore except EPS, which is in INR.

Kingfisher Passenger Statistics