Kingfisher Announces Q4/Annual Financial Results

You thought it was bad when 9W lost ₹1236 crores for the fiscal year, right?

Well, Kingfisher just lost almost that much for the quarter.

http://aeroblogger.com/home/blog/kin...res-in-fy2012/

no surprise here....

Yeah. The surprise is that even after losing all this money, they're still around.

There is a difference between profit and cash flow. They are still alive because they are able to increase short-term borrowings to meet current cash requirements. And I'm guessing they are able to obtain credit simply because at this point, the creditors believe there is more value as a going concern than if its liquidated.

No, what I meant was I'm shocked that they still have access to cash (from creditors, travelers, etc.) after spectacularly demonstrating that the finances of the airline are in the toilet.

Well, there's a price for everything. For the right [low] price, travelers will be willing to buy IT tickets. And given the right terms (i.e. sufficient collateral and seniority in case of liquidation), creditors will extend credit.

That there haven't been any new flight cancellations in the last 2 months, suggests that IT's operations have somewhat stabilized. They seem to be able to recoup their variable costs. So it makes perfect economic sense for a lender to be willing to extend super senior, short-term credit. And for IT and it's existing creditors to accept such terms.

Kingfisher's information to the media regarding FY12 results state that the company has had its networth eroded but they are still a going concern.

They seem to have stabilized and have a reliable schedule operating with 14 to 20 aircraft. No major incidents over the last 2 months as stated in an earlier post. They have /or are in the progress of reconfiguring the aircraft and it is only the massive debt and its interest that is killing them. More importantly, the staff have more or less been loyal and have not disrupted operations.

I have got a feeling that over the next 12 months, they will get recapitilised and will manage to restructure the debt to substantially lower the interest costs. This way they can return to short term profit and plan a much much slower growth strategy. They have already had their fingers burnt once so hopefully they would have learned from it.

By having a consistent product (Jet, are you listening?), they will be able to increase operations slowly and still be able to control costs. Give it another 24 months and i reckon OneWorld will have them back with arms wide open.

Just my 2 pennies worth.

I don't think it's possible. Kingfisher's cost structure is for 60 aircraft, and they are only getting the revenue of 15. And then there are the massive debts that need paying. The tax departments are more than willing to freeze accounts if IT doesn't pay them back.

I think IT is beyond the point of no return. But I guess we'll see in the next few months

If you ever have to owe money to a bank, make sure its a lot of money. They'd send a bunch of goons to recover a motorcycle loan but be the motorcycle company, and default on their loans, and expect to get treated with kid gloves.

But who would want to recapitalize KF and clean up after the Fat Man? Given the red ink on their BS, it'd be cheaper and more importantly cleaner, to start a brand new airline, poach all the KF staff and avoid making the same mistakes

Right, exactly. If you take a small loan, it's your problem. Take a big loan, it's their problem.

But still, I'd think the banks would be less unhappy writing this off than throwing more good money after bad?

It's a Morton's Fork. You think the banks can choose to lend or not to lend but either way, they're up .... creek. Might as well lend and play the odds that KF pulls off a miracle or that they are able to find a greater fool

The best part I find is the plain flat out lying that is going on: http://www.flightglobal.com/news/art...d|Flightglobal

The reconfig is being spun as them returning to normal 60 aircraft ops in one year.