Kingfisher Airlines Brought In Deep Trouble & Also Its Share Holders, Creditors

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Of late, Kingfisher Airlines is cancelling its flights and the number of cancellations are increasing day by day. Despite Kingfisher Airlines chief Vijay Mallaya’s statement on Thursday that “decision to reschedule and cancel flights was taken to cut losses and we are only ensuring loss minimization by flight rationalization and enhanced revenue through reconfiguration”, can be accepted with a pinch of salt.

Cash strapped Kingfisher Airlines is in deep  trouble and  the airline is on the verge of closure if they don’t secure working capital loans soon. To add more trouble to already gasping airline, around 130 pilots have tendered their resignations for non-payment of salaries.

I am not aware of nitty gritties of aviation business but common sense demand that when you are short of funds then you should not splurge much. Although Vijay Mallaya is a seasoned business tycoon and knows how to run a business yet he has failed himself and his associates in running Kingfisher Airlines. It is not that all the no-frills airlines are in trouble. On the contrary, Indigo Go Air are running in green thanks to their way of workings and more business like approach.

It is being reported in the media that Vijay Mallaya has met civil aviation minister and have pleaded for bailout for his dying airlines. This is a straightforward case of mismanagement and faulty business models and the government should under no circumstances offer any bailout package. The government has already committed himalayan blunder to offer bailout package to Air India, which has not learnt any lessons and is going from bad to worse every day.

The government should not offer tax payers money to failed enterprises whether they are in government or private sector. If any enterprise cannot run on its own strength then they should not look for crutches  from government, which is already in tatters.

Instead of  going in for expansions in a big way, Mr. Mallay should have gone for expansion after recording profit in the existing routes. As they say – slow and steady always wins the race. What was the need to spend so much money on making bikini clad Kingfisher calendars and  throwing extravagant parties for the models, investing in Formula One Car Races and in IPL, which are loss making ventures so far. When you have  suffered a loss of Rs. 1027 crore in 2010-11 and has a debt of over Rs. 7057 crore, the basic business sense demand that first of all, you set your existing  enterprise in order and then venture into unproductive activities.

Unfortunately, our political system is so corrupt that the business tycoons take advantage of this loophole and are not afraid of any consequences. There should be mechanism to question such blatant practice of doing business where stake holder’s hard earned money is frittered away.

The best course of action for the promoters of the Kingfisher Airlines should be not to torment further its passengers, employees, share holders and other associates. They should sell their prime assets, which they have enough, and pay off all their debts and say goodbye to the airlines.

Only then, they should restart their photoshoots for calendar girls and enjoy cricket matches and Formula One Races over a glass of beer 😉

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