Kingfisher's Financials


Kingfisher's performance improved considerably in 2008-09 as compared to 2007-08. The total revenue almost doubled. It increased from about Rs.20, 600 mn in 2007-08 to Rs.46129 mn in 2008-09. The loss after tax reduced from Rs.24000 mn approx. to Rs.2100 mn during the same period.

The company's shareholding pattern shows that 66% of the shares are held by the promoters, which include 32% holding by United Breweries Ltd., 23% by Kingfisher Radio Ltd., 5% by UB Overseas Ltd. and 6% by Dr. Vijay Mallya. The remaining 33% are held by a variety of investors out of which individuals hold 13%.
The debt-equity ratio which shoes what proportion of equity and debt the company is using to finance its assets reduced from 3.29 in 2007 to 2.32 in 2008. This means that the company reduced its dependence on debt for further growth. Long term debt-equity ratio fell from 2.93 to 1.95 and the current ratio, which is the ratio of current assets to current liabilities, fell from 1.61 to 1.44.

The economic recession brought hard times for the aviation industry. The main cause was the increasing oil prices which rose to an all time high of USD 147 in July 2008. The Indian aviation industry was hurt even more because of the additional customs duty and sales tax paid on these high fuel prices. The average price of Aviation Turbine Fuel (ATF) increased by about 60% in the six month period from April to September 2008. The impact on Kingfisher Airlines alone was to the tune of Rs.640 Crores.
This increase in cost in the form of fuel surcharge was passed on to the customers. They paid 55% more for their tickets. These increased fares combined with the lean season between June and September led to a fall in traffic. The whole industry faced low capacity utilization during this period. Kingfisher's seat factor dropped in line with the industry by about 6%.

Kingfisher Airlines took various steps to get over these tough times. The merger of Kingfisher with Deccan led to a network alignment. It also enabled savings on operating costs such as Engineering and Ground Handling, Insurance and Catering. Employee costs were also been addressed through an integrated organization which enabled the Company to terminate the contracts of most expatriate staff and impose a hiring freeze on new appointments.

Other steps included cutting down on costs. Two aircrafts were returned to Lessors with no additional cost, and the Company is in discussion for the return of a further eight aircraft.

The Company also deferred its international roll-out plans apart from one flight operating between Bangalore and London.

These efforts bore results for the company. The unit revenues increased by over 33% between HI FY08 and HI FY09. The Average Ticket Value i.e. the number of seats occupied as a proportion of total seats available, improved by 55% over the same period. The absolute revenues increased by 33% despite a capacity reduction of 4%.

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