The Rise and Fall of Kingfisher

"We are committed to achieving our ambition of making , 's largest private both in capacity and market share. The Airline ushered in a new era of luxury in India's domestic aviation sector with its brand new aircraft with stylish red interiors, and smartly dressed crew and ground staff. Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems on every seat with guests being able to watch live TV in-flight" said Dr.Mallya At the launch of the airline1 The company mission also mentioned that the Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests” was a statement made enthusiastically by Mr. Vijay Mallya2 at the time launch of the airline in 2005, which was acclaimed as a luxury airliner by many.

Little would have he expected the kind of rough weather the airline was to face just a in three years, falling from a peak of highest market share 26% in 2009 to a low of 6.5% in 2011 and grounding of all the aircrafts and suspension of license in four years. It was difficult to believe that airline will be grounded for the very same reasons sons, safety and value based service3.

Grounding of Kingfisher was not an isolated event. Several Airlines started after deregulation of the airline industry as a part of governments’ liberailsation policies under economic reforms initiated in 1991, had been grounded (see exhibit 1), raising doubts whether necessary care had been taken in opening the airline sector. After all starting an airline requires huge investment and closure of it does lead to wastage of precious national resources and high costs to the passenger and the country ______

@ Krishna Kumar 2015

Prepared by Prof. Krishna Kumar, Former Professor, IIM and Prof. Rajkumar Kovid, IFIM, Bangaluru. The case material is inspired from a project work done by Priyamvada Singh, Krishna Jayadev, Maitree Mishra, Pushpendra Singh, Ramaiah Karumud PGP II participants of Indian Institute of Management Rohtak.

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Background of the Company

Established in 2003, Kingfisher Airlines Limited was an airline group based in India. It was promoted by the Bengaluru based United Breweries Group. Mr. Vijay Mallya, Chairman of the Group had considerable experience in managing one of the largest breweries businesses in India and had managed several acquisitions successfully (exhibit 2). The airline started commercial operations in 9 May 2005 with a fleet of four new Airbus A320-200s operating flights from to Delhi4. It visualized starting its international operations soon.

The company also owned two subsidiaries namely Northway Aviation and Vitae India Spirits. Northway Aviation was engaged in the business of financing pre-delivery payments and aircraft acquisition. By 2008 Kingfisher Airlines achieved the status of the only five star airline in the Indian skies5 and was known for providing world class in-flight services to its passengers.

The Take Off

The promoter of the airline was known for quality and style. At the age of 28 he took over the reins of his family business. His lavish lifestyle brought him in corporate limelight at an early age. He used his popularity to boost UB Groups brand and coined the “King of all times” slogan for his beer5a. . His international foray of buying and selling Berger Paints U.K. and using the money on fast cars, yatchs and maintaining 40 odd international homes transformed him from Chairman UB Group to its brand icon. “My own lifestyle got intertwined with brand personality and so without really planning it that way I became almost my brand ambassador of and that’s just the way it’s kept on developing” he once said5b. The slogan helped him create a brand image of Kingfisher airlines right away.

When Kingfisher Airlines began its operations, there was no other airline that came close to it in quality. The Indian Airline was nowhere to be quoted as a class-apart passenger carrier, so only was dominant players in the Indian aviation industry (exhibit 3). Other players did not matter as they were catering to low cost market.

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Kingfisher hoped to provide superior experience in air travel and be ahead of competition in product and service offerings, with brand new aircrafts and 5-element product concept: high seat pitch, personalized entertainment, hot meals, home delivery of tickets and valet service, treating travelers not as passengers but “guests”6. With this approach, starting with 4 flights a day between - , it grew to 104 flights a day connecting 16 cities by inducting 17 aircrafts in a single year and set a world record of fastest aircraft induction in 2005-067. By the year 2006, the Airlines became an airline synonym with five travel and was becoming famous among business travelers. In December 2006 Kingfisher announced that it would provide live in‐ flight entertainment which was first in its class by partnering with DTH pioneer Dish TV India Limited8.

Kingfisher’s income for year ending on 30th June 2006 was INR 3.05 Billion but this amount couldn’t over shadow losses amounting to INR 3.4 Bn (exhibit 3).

Aircrafts

Aircrafts are one of the most important assets of any airliner. Choosing and inducting the same requires major decision making skills. Kingfisher Airlines started with an Airbus A‐320 aircraft and continued using aircrafts of the same line. Kingfisher did not acquire any aircraft of its own. All the aircrafts of Kingfisher Airline were dry leased9 one. In dry lease, the lessor (who actually owns the aircraft) gives the aircraft to the lessee (Kingfisher in this case) for a period of minimum two years without insurance, crew, ground staff, supporting equipment, maintenance, etc. The aircrafts charges thus become operational cost, which plays a crucial role in cash flow calculations. Also, since the company did not buy aircrafts, it could not command any bargaining power over Boeing or Airbus.

Kingfisher’s Vision and Mission

Vision and Mission of a company plays very important role in the functioning and performance of any company. Kingfisher described its mission and vision in the following way10.

Vision: Value: Mission: The Kingfisher Safety, • Be the most successful Full Airline family will Service, Service, True Value airline 3

consistently deliver Happiness, operating in India a safe, value based Teamwork • Creating a following of ‘fans’ and enjoyable and and not just loyalists. travel experience to Accountability • Drive ‘Addiction’ to Kingfisher all our guests not just loyalists. • To be the Market Leader by 2010

In line with the above, to expand domestic routes and enter international routes, Kingfisher decided to increase its fleet and placed orders for many wide bodied A340-500s, A330s and A350s. It became the first carrier to sign up A380 type of Aircrafts in 200711. Although the airline experienced high traffic on metropolitan city routes like Bangalore Mumbai, , and , congested airport infrastructure in these state capitals limited its organic growth.

Moreover, the competition was becoming intense in the Indian aviation industry12 with 5 carriers fighting one on one. IndiGo, SpiceJet or GoAir were not new entrants in the industry. They were almost as old as Kingfisher Airlines. However they had restructured themselves with time and had retained their LCC business model and had not introduced business class in their aircrafts in so many years of operations.

Another problem that Kingfisher was facing was that it could not start international flights without having 5 years’ experience in domestic operation13. Jet Airways, owned by an NRI Mr. Naresh Goyal, did not have any such restriction and go straightaway go international as the government adopted open sky policy for airlines. Mr. Mallya was optimistic that the Ministry of Civil Aviation may waive this condition14. But growth could not wait for the same. By 2007 Kingfisher expanded its route network to 34 cities while doubling its frequency to 208 flights15. Besides it also introduced Kingfisher First to increase its yield16. The market share had increased to 13% in 2007 from 2% in 2005, while Jet Airways share had dropped from 45% to 22.7%.17. However, all the efforts of increasing market share were adding to company’s losses.

The income for period ending 30th June 2007 increased to INR 16.2 Billion but losses also accumulated to INR 4.19 Billion. Things were pretty much on right and fast track and were almost going as per plans. Kingfisher had carried 17.5 Million passengers with a fleet of 4

41 aircrafts and a schedule of 255 flights18.

With airport modernization in metro cities set to be completed between 2008 and 2010, and tough competition from a large number of new entrants and LCCs offering low fares, the carrier’s future growth depended on the ways it increased its market share.

The company therefore was looking for inorganic growth to increase its market share. It was not unexpected because Mr. Mallya had successfully managed several acquisitions. The promoter of Jet Airways Mr. Naresh Goyal on the other hand had vast experience in Airlines business, but no experience in managing acquisitions. At that point there were two options available, both of low cost carriers: One, Sahara India and the other . Although Sahara India was established in 1991 and had 15 years standing in the field, but was fast losing market share (which had come down to a low 8%) and was also making loss19.

Air Deccan was established in 2003 and grew fast capturing 22% market share by 200520. Air Deccan was working on somewhat different model providing extremely low fare based services. It sold few tickets even for one Rupee21. Towards this the airline was using several cost cutting measures. It had frill free flights without any complimentary service, in which even water was not free22, unlike Kingfisher which distinguished itself with variety of free services as described earlier. The crew of Air Deccan including pilots stayed in low cost accommodation such as guest houses23, unlike Kingfisher whose staff stayed in big hotels.

However, the airline’s growth plans were frustrated by cash problems. Its IPO to raise equity for buying new aircrafts did not click as expected24. Air Deccan was therefore also looking for a partner to fund expansion and Kingfisher was looking for a partner to increase market share (which had been a major focus of its vision). Sahara India was in negotiation with Jet Airways, which was more established although it was also making loss25. Air Deccan was thus a better choice of Kingfisher. Ittherefore made an offer of Rs.5550 million, at a share price of Rs. 155, which surprised many industry experts in the aviation industry26. The deal also included Vice Chairmanship to Mr. Gopinath, who was owner of Air Deccan. Apart from 26% share from the owners, Kingfishers also acquired 20% share from public and thus took 5 management control of Air Deccan27. Later, in June 2007, the two companies decided to merge and Air Deccan being rechristened as Kingfisher Red28. Some industry experts felt that the move was also expected to help Kingfisher enter into international foray as Air Deccan was to complete five years of operation in 2008 that was required required for the purpose of international operations license29. . The Acquisition Hick ups

The growth path however was not as smooth as expected. The managerial headaches were increasing with the task of post-merger integration. There was duplicity of tasks after the Air Deccan acquisition, as Kingfisher Airlines operated two different aircrafts, Airbus and ATRs (of Air Deccan). This caused additional headache of maintaining different size and shape of aircrafts, which required different decision making skills and financial burden. For example Kingfisher required double the number of personnel. If it would have relied only on Airbus then it could have easily reduced its operational costs. The airline was able to sort out the airport space issue by sharing the extra departure space of terminals30.

Now Kingfisher was carrying 10.9 Million passengers annually with a fleet of 77 aircrafts, operating 412 domestic flights daily. Combined share of Kingfisher and Air Deccan surpassed Jet Airways and Indian. The period ending 31st March 2008 generated gross income of INR 14.4 Billion and losses dramatically were reduced to INR 1.9 Billion but this does not include the aftermath of merger of Deccan. Since it was a streamlined and well planned year by Kingfisher, this year proved to be, profit-wise, the best year right from inception till date.

The marketing issues however continued to plague the company. As Kingfisher Airlines decided to introduce Kingfisher Red, it automatically entered into price war in domestic market against all other carriers, especially the LCCs. Since Air Deccan was offering some tickets for meager one rupee, Kingfisher had to continue such kind of marketing campaigns. But the problem was that Kingfisher almost trashed all the marketing strategies of Air Deccan31, thinking of reducing operational costs. But here came the deviation. Airline business has extremely long gestation periods. For Kingfisher, Air Deccan was a totally new business and benefits of low cost Kingfisher 6

Red could flow only after completing the post- merger integration. Kingfisher however seemed to believe that Air Deccan has been in the market much before Kingfisher Airlines so it should bring Kingfisher Airline’s financial statements into green very soon

Some business fliers which were earlier loyal to Kingfisher Airlines used all their frequent flier miles, bought free tickets, gave the same to their family to enjoy and they never returned back to Kingfisher32. For them Kingfisher Airlines became a compromised airliner and they started going back to Jet Airways which also is cash strapped but has a sustainable business model. As soon as Kingfisher realized that they had committed a mistake by changing the business model of Air Deccan, it increased price of Kingfisher Red and brought the same on par with other airlines33. At this point of time Kingfisher Red had become a lost opportunity and even the management was confused if it would call it a normal carrier or a low cost one.

High Up in the Sky: Foray into International Operations

The year 2008-09 was quite historic for Kingfisher Airlines. In March 2009, in a little over three years, Kingfisher Airlines became the largest passenger airliner of world’s second most populous nation with 26.7% domestic market share34. The airline also finally got permit to operate on international routes and on September 2008. Kingfisher flew for the first time overseas from Bangalore to London. Kingfisher was now offering 3 classes of travel to passengers: Kingfisher First: Premium Business Class which was truly best in class, Kingfisher Class: Premium Economy or the basic economy of flagship carrier Kingfisher and Kingfisher Red: Low fare basic class or in other words the new name of Air Deccan35. Financial statements for year ending March 31st 2009 were consolidated statements of both Kingfisher Airlines and Air Deccan hence now the income increased many folds to INR 53 Billion, but so did the losses which increased to INR 16.1 Billion.

Kingfisher Airlines continued its run of being the nation’s largest passenger carrier in the year 2009-10 also, a healthy market share of 26.7% with 11 Million passengers flying with it. The fleet although got reduced to 68 aircrafts from 77 aircrafts and domestic flights per year got reduced to 366, but international operations increased 7 significantly to 12 flights daily. During the year Kingfisher won numerous accolades36 from agencies around the globe and continued being rated as India’s only Five Star Airline by Skytrax for three years in a row37. However it had been 4 years since birth of Kingfisher Airlines and shareholders were still waiting to receive first dividend from the company but company continued its run of losses and reported a marginally increased losses of INR 16.5 Billion and gross income shrunk to INR 50.9 Bn for year ending March 31st 201021.

The Dark Clouds: Loss of Market Share

The dark clouds over Kingfisher Airlines were getting darker and dense with no ray of sunshine. Jet Airways (a much stable and sustainable carrier was also badly affected financially due to its acquisition of Sahara Airways), surpassed Kingfisher Airlines to become country’s largest passenger airliner as it reported a market share of 25.5% whereas for Kingfisher it came down to 19.8% despite increase in flights and matching complimentary services 38. On the rise was another player, IndiGo, promoted by another NRI from USA, as it reported a good 90% seats being filled and was gaining market share rapidly. Kingfisher’s domestic daily operations were same 366 flights daily but its international operations increased to 28 flights daily39.

The airline reported an increased gross income of INR 63.6 Billion and reduced losses of INR 10.2 Billion for the year ending 31st March 2011.

Turbulence at High Altitude: Exit from Low Fare Business

Kingfisher Airlines for the very first time declared in Sept. 2011 that it is having some serious cash flow problems40. It blamed the same to rising fuel costs41 Dozens of pilots left Kingfisher for rival airlines during 201142. Kingfisher’s dues kept on piling up and it was goodwill of United Breweries group that the lessors allowed the same. The amount eventually piled up so much that lessors filed suits against Kingfisher Airlines across globe and forced Kingfisher to ground majority of aircrafts43.

Faced with the financial problems the Kingfishers decided to exit the low cost Kingfisher Red business44. Business standard reported45: 8

“Kingfisher has run up a debt of Rs 6,000 crore, accumulated losses of Rs 5,000 crore and pays out an interest of Rs 1,300 crore —more than its market capitalisation of Rs 1,232 crore as on Wednesday’s price of Rs 24.70 an equity share on the National Stock Exchange. Faced with limited options, when the markets are not really conducive to raising equity capital, Mallya, as CMD of the 2005-founded firm, is trying to negotiate in whatever little space he has left. That is, sweat more equity from what has been invested. The aim is to push up revenues from fine- tuning operations, shed some realty assets, sale and lease back around 10 A320 aircraft thus reducing the cash outflow, reconfigure its fleet to drive in more revenues, swap some high-cost rupee loans into low-cost forex loan and try to purchase aviation turbine fuel from global players in an effort to reduce the sales tax burden imposed by various states in India”. “We are getting out of Kingfisher Red, which is our low-cost service offering,” Mallya said …

“We are reconfiguring our Airbus fleet so that they will all be dual class. The number of first-class seats may be reduced from the current levels in order to fit in a larger number of economy seats which will go up by 10 per cent.”

Regarding future course the Business Standard reported46:

“The company, he (Mr. Mallya) said, would be offering full service on all its Airbus aircraft. The aim: more seats, higher occupancy and hopefully higher ticket values, he said after an eventful annual general meeting of Kingfisher Airlines. The company flies a total of 66 aircraft, 39 of which are from Airbus, while the rest is of ATR, the turboprops which connect Tier-II towns in India. A majority of the Kingfisher Red class of service is on these turbo-props. All ATR aircraft of Kingfisher Airlines will continue to operate in a single configuration as a Kingfisher Class full- service product. All advance reservations made by guests in the Kingfisher Red class of service would be fully honoured, said the company’s officials. This is so, because the reconfiguration will take about four months to complete. According to the officials, the load factors in Kingfisher First have been 50 per cent on an average. “As such, the capacity is being reduced on the existing dual class Airbus aircraft and introduced on existing single-class Airbus aircraft. Kingfisher will,

9 therefore, offer the Kingfisher First service on all its Airbus routes albeit with an overall reduction in capacity,” a source said.

Why the phase-out? Officials said “Kingfisher Class (full service economy class of service), over the past six months has generated higher yields and seat factors than the no-frills Kingfisher Red class of service. Following the re-configuration of all Airbus aircraft, the number of economy seats across the Airbus fleet will increase by approximately 10 per cent and this capacity will be offered across the board as a Kingfisher Class full service product,” he said. Industry analysts are skeptical about this move by Kingfisher Airlines to exit the low cost model. “Getting into the full service offering across all routes is a challenge,” notes one among them47.

Creditors warned the firm that if it failed to raise almost USD 159 Million in equity then they will not be able to restructure its debt. Kingfisher’s top brass believed that they would continue being the way they have till now but the problems were bound to get really out of hands. For the very first time Mr. Mallya himself declared that the airline was in dire need of funds in order to maintain operations48

The income for year ending 31st March 2012 stood at approx. INR 54.9 Billion, which was lowest since 2007 and the losses increased sharply to INR 23.3 Billion.

The Grounding of Airline: Suspension of Operating License

The beginning of year 2012 marked the most turbulent period of all for Kingfisher Airlines. On 5th January 2012 State Bank of India (largest creditor of cash strapped Kingfisher Airlines) declared Kingfisher Airlines as a non‐performing asset49. SBI‟s exposure to Kingfisher was staggering over INR14.5 Billion. O n 18th February the airline became headline of almost all newspapers when it grounded most of its aircrafts and declared that it is operating mere 28 aircrafts with curtailed schedule of 175 daily flights50. Things now looked out of hands of the management of Kingfisher and it declared 2000 job cuts along with longer work hours51. It seemed like Kingfisher assumed to be a manufacturer and not a service provider, where each employee is a jewel for the firm..

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The company was finding it difficult to pay staff salary from March 2012. There were frequent cancellations of flights due to oil marketing companies’ refusal to give fuel, pilots’ shortage and staff agitation etc. The number of pilots left the company. The consortium of banks led by SBI also declined to further issue more debt to Kingfisher until and unless Kingfisher itself raised some funds through fresh equity. Kingfisher Airline’s all accounts stand frozen by the Tax Authorities due to non‐payment of dues52. Also The International Air Transport Association (IATA) suspended Kingfisher from its International Clearing House dealing a fresh blow to the ailing carrier as it seeks funds to stay aloft53. The condition was worsening with everyday passing in June- Sept.2012.

By October the situation reached a flash point. A lockout was declared on Oct.1, .2012 due to sudden strike by some engineers with some pilot also joining it (because they were also not getting their salary paid), leading to frequent cancellation of flights54. The DGCA and the Minister were concerned about safety of passengers as engineers were not giving “airworthiness” certificate55. The situation got worsened when spouse of an employee committed suicide on Oct. 4, 2012, allegedly due to non- payment of salary56.

On October 20, 2012, the DGCA suspended the operating license of Kingfisher Airline, citing the latter’s inability to provide any reasonable revival plan57. The suspension of license came as the airline had declared lockout on October 1, 2012 up to October 18, which was further extended to October 23. The airline which had departure rate of 2930 flights per week last winter, thus, came to standstill.

The civil aviation minister fully backed the action of DGCA. The suspension had come a day after the airline had sought more time to reply to show cause notice sent by DGCA on the revival plan. The DGCA was not satisfied with the reply of the airline as the latter had not come out with the solution to its industrial unrest problem. The show cause notice had asked plans to restart the operations and pay salary to employees and had also said that the airline risked the suspension of license as it had failed to establish a safe, efficient and reliable service58. The regulator had rejected the passenger carrier winter schedule of flight departure59.

The suspension of operating license was a shock to the employees, “we only wanted our salary, not the closure of the airline, which is source to 11 our livelihood”. a senior staffer said60. Not only the Minister of Civil Aviation but even the leader of JD(U) and convener of NDA was very upset and slammed61 Mr. Vijay Mallya.

The Financial Crisis

It was not only the salary of the 3000 odd ground staff, engineers and pilots which was not being paid, the other payments like fuel and airport charges were getting in default. Indeed as early as July 2011 the oil companies refused supply of aviation fuel on credit62. By October the Airport Authority refused permission of using hangers at 2 airports63. The consortium of banks, which had very warmly taken Kingfisher as a valued client just a few years back, were refusing further credit unless the company infused fresh equity64, which was not easy as the share prices were also declining with number of flights. The only way was if the owner put some new equity personally. But the owners were non- committal on putting the family jewel to save the airline. The only other hope was the favourable deal of owner UB Group equity to Diego of UK, which was keen to acquire part of UB Group business65. The Challenges Ahead

The suspension of operating license was a serious development because for the extension beyond the current license period (due to expire on December 31, 2012), the airline had to first get the suspension revoked before it could apply for extension of validity of license66.

Some Industry expert felt that despite the reforms allowing private airline to operate, in India starting an airline is not everyone’s cup of tea67. who although entered the Guinness Book of Records for having the youngest Chairman of a scheduled airline, but airline is yet to receive an aircraft and officially a defunct airline. In India every time an airliner wants to buy an aircraft, it has to seek permission of the government and experiences numerous procedural delays by the governmental agencies. Also there is an unusual rule that in order to fly overseas, the carrier needs to complete minimum five years of operations domestically68. Further adding to the woes in the operational environment, the government was perceived to be continuing its protectionist approach towards . For example many of Indian airports are capable of catering super jumbo Airbus A‐380 aircrafts but since Air India don’t have any of those so the government has not allowed any other private player from anywhere in the world to land 12

A‐380 for commercial in Indian territory. There was no privatization of airports before 2006 but even after that only handful of airports have been privatized, which did not make much sense to many in the aviation industry.

Etihad Airways Offer

On December 10th, the new buzz was that Etihad Airways, the national carrier of United Arab Emirates (UAE) is like to acquire 48% stake in Kingfisher and take over the management control of Kingfisher69. This would partly release the pressure on the owner Mr. Mallya. However one was not sure on the date what will finally happen in view of the statement of the Minister of Civil Aviation that “The airline has been saying for a long time that they have a fool proof plan, but we have not received any such plan yet. It is DGCA, who will decide the future of Kingfisher, if a satisfactory plan is received”70?

Questions:

Q1. Enumerate the reasons for meteoric rise and fall of the first five star airline in India. Q2. Could there be any strategic reasons also associated with the problem(s)? Q3. If you were Mr. Mallya, what course of action you would have followed in 2004-05? Q4. What are the wider ramifications, if any, of the failure of Kingfisher? Q5. Should government act in the matter? If so, what should it do?

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References

1. http://www.theubgroup.com/business_aviation.aspx 2. http://www.theubgroup.com/finance_presentations.aspx 3. All Kingfisher Air flights grounded by strike (http://www.financialexpress.com/news/all-kingfisher-air-flights- grounded-by-strike/1010246 October 1, 2012 3. Kingfisher’s license suspended (http://www.thehindu.com/business/companies/kingfishers- licence-suspended/article4016399.ece) Oct. 20, 2012 4. Mahmud Hossain and D.G.Allampalli, “Kingfisher Airlines- Acquisition of Air Deccan: India’s First Low-Cost Carrier”, The Asian Business Case Centre, Nanyang Technological University, ECCH 111-013-1 (p.3) 5. http://www.airlinequality.com/news/kingfisher_5str2010.htm 5a. Mahmud Hossain and D.G.Allampalli, opcit p.2 5b. Leahy, J. Vijay Mallya, FT.com (Oct. 26, 2007) 6. http://www.theubgroup.com/finance_presentations.aspx 7. United Breweries Holdings Limited, Annual Report 2005-06, extracted from Mahmud Hossain and D.G.Allampalli, opcit p.3 7. Mahmud Hossain and D.G.Allampalli, “Kingfisher Airlines- Acquisition of Air Deccan: India’s First Low-Cost Carrier”, The Asian Business Case Centre, Nanyang Technological University, ECCH 111-013-1 (p.3) 8. “Kingfisher Airlines to offer live in-flight entertainment”, The Hindu Business Line Dec. 9, 2006 .http://www.thehindubusinessline.in/bline/2006/12/09/stories/2006 120902140500.htm 9. “Lessors Set to Grab Kingfisher Planes” http://online.wsj.com/article/ SB10001424052970203764804577056131578919936.html Nov 24, 2011 10. http://www.theubgroup.com/finance_presentations.aspx 11. Mahmud Hossain and D.G.Allampalli, opcit p.3 12. Rishikesha T. Krishnan, Indian Airline Industry in 2008 v2 0 (2), Indian Institute of Management Bangalore (2008) p.7 13. Rishikesha T. Krishnan ibid 14. Mahmud Hossain and D.G.Allampalli, opcit p.3 15. ibid 16. ibid 17. ibid 14

18. Chaahat Khattar “Kingfisher- A Case Study” http://www.slideshare.net/ckhattar/kingfisher-airlines-a-case-study 19 Chaahat Khattar “Kingfisher- A Case Study” ibid 20. Chaahat Khattar “Kingfisher- A Case Study” ibid 21. Fly on Air Deccan @ Re 1, The Economic Times Jun 7, 2005, http://articles.economictimes.indiatimes.com/2005-06- 07/news/27484169_1_capt-g-r-gopinath-air-deccan-low-cost- carrier 22. Case 1: Air Deccan: The first Low Cost Air Carrier of India - IILM www.iilm.edu/iilm-online/Casebook/Cases2007/1.pdf 23. M.R. Dixit, Sunil Sharma et.al. “Aspirations, Enterprise Strategy and Sustenance of a Start-up in a Competitive Environment” extracted on May 10, 2013 from http://www.iimahd.ernet.in/publications/data/2007-11- 03Dixit.pdf 24. Our IPO got caught in a tsunami: Gopinath, DNA Jul. 5, 2006 25. Mahmud Hossain and D.G.Allampalli, opcit p.3 26. op.cit p.7 27. ibid. 28. opcit p.8 29. op.cit.p.7 30. Rishikesha T. Krishnan, op.cit.p.9 31. Chaahat Khattar “Kingfisher- A Case Study” op.cit. 32 ibid 33. ibid 34. (http://centreforaviation.com /analysis/kingfisher-airlines-captures- majority-market-share-with-strong-passenger-growth-in-mar-2009- 7103 35. Chaahat Khattar “Kingfisher- A Case Study” op.cit. 36. “About us” http://flykingfisher.com/aboutus/achievements.aspx 37. “5-STAR AIRLINE' Crown for Kingfisher Airlines, Again” http://www.flykingfisher.com/media-center/press- releases/%E2%80%985-star-airline%E2%80%99-crown-for- kingfisher-airlines-again.aspx 38. Chaahat Khattar “Kingfisher- A Case Study” op.cit. 39. ibid 40. Annual Report 2010-11 Kingfisher Airlines http://www.flykingfisher.com/pdf/Kingfisher%20Annual%20Report%2 0-%201%20-%2029.09.2011.pdf 41. “Kingfisher Airlines crisis: Mallya blames it on oil price spike” Times of India Nov 12, 2011 15

http://timesofindia.indiatimes.com/business/india- business/Kingfisher-Airlines-crisis-Mallya-blames-it-on-oil-price- spike/articleshow/10697093.cms 42. “Kingfisher sees exodus of pilots, biz may be hurt” Hindustan Times, Oct. 4, 2011 43 “Lessors Set to Grab Kingfisher Planes” The Wall Street Journal, November 24, 2011 44. “Kingfisher Airlines to exit low-cost business” The Hindu, Sept. 28, 2011 45 Kingfisher chucks Red to stem losses, Business Standard Sept. 29, 2011 (http://www.business- standard.com/article/companies/kingfisher-chucks-red-to-stem- losses-111092900104_1.html ) 46. ibid 48. Vijay Mallya's Kingfisher seeks 400 crore loan from SBI One India News, Nov. 19, 2011 http://news.oneindia.in/2011/11/19/vijay-mallya-s-kingfisher-to- seek-rs-400-crore-loan-sbi.html 49. “Kingfisher Airlines an NPA: SBI Chief” Live mint The Wall Street Journal Jan 05 2012 http://www. livemint.com/Companies/z8wRcz7ypViGjVzxHmEdFM/Kingfishe r-Airlines-an-NPA-SBI-chief.html 50. Kingfisher grounds 15 jets on failure to pay maintenance costs NDTV January 2, 2012, Kingfisher Airlines grounds more flights, passengers suffer Press Trust of India | February 18, 2012 51. “Kingfisher Airlines mulls 2,000 job cuts, longer work-hours” Economic Times Jan 4, 2012 52. CBEC freezes Kingfisher Airlines bank accounts, ETNow Feb. 24, 2012, I-T dept freezes Kingfisher Airlines' bank accounts, ETNow May 29,2012 53. “Kingfisher Airlines suspended by IATA for non-payment of dues”, Times of India, May 7, 2012 The airline, which never made a profit since its inception in May 2005, reported a net loss of Rs 444.26 crore in the December quarter. It suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057.08 crore apart from over Rs 4,000 crore of accumulated losses and a restructured long- term loan of around Rs 7,000 crore. 54. DGCA suspends Kingfisher's flying license Times Now 20 Oct 2012, 1458 hrs IST 16

(http://www.timesnow.tv/DGCA-suspends-Kingfishers-flying- license/articleshow/4412959.cms) 55. ibid 56. “Wife of Kingfisher Airlines' employee commits suicide due to non payment of salary”, Economic Times Oct. 5, 2012 57. “DGCA suspends Kingfisher’s flying license”,op.cit. 58. ibid 59 “Kingfisher grounded for the winter as DGCA denies nod” Oct. 18, 2012 (http://www.domain- b.com/aero/airlines/20121018_kingfisher.html ) 60. “Kingfisher employees shocked over suspension” http://post.jagran.com/Kingfisher-employees-shocked-over- suspension-13507304#sthashQu89k1RP.dpuf 61. “Arrest Mallya for abetment of suicide: Sharad Yadav ”(http://articles.timesofindia.indiatimes.com/2012-10- 07/india/34305808_1_vijay-mallya-abetment-sharad-yadav TNN Oct 7, 2012 62. “OMCs stop oil supply to Kingfisher Airlines” The Economic Times, Jul 19, 2011 “Kingfisher services hit as oil firms refuse to refuel”, The Hindu Business Line Oct. 13, 2011 63. “Kingfisher Airlines told to pay Rs 60 lakh per day to use Mumbai airport” Times of India Dec 2, 2011 64. “Kingfisher Airlines Still in Trouble; Lenders Refuse to Extend Loans” International Business Times Feb. 22, 2012 (http://www.ibtimes.com/kingfisher-airlines-still-trouble-lenders- refuse-extend-loans-414342) 65. “Mallya seals Diageo deal but Kingfisher future uncertain”, First Post business, Nov. 12, 2012 (http://www.firstpost.com/business/mallya-seals-diageo-deal-but- kingfisher-future-uncertain-521415.html ) 66. Chaahat Khattar “Kingfisher- A Case Study”, op.cit 67. ibid 68. Rishikesha T. Krishnan,op.cit. 69. “Kingfisher, Etihad renew deal talks” Times of India, Dec. 12, 2012 (http://timesofindia.indiatimes. com/business/india- business/Kingfisher-Etihad-renew-deal- talks/articleshow/17577713.cms ) 70. “Kingfisher Airlines should revive for its employees, passengers:” Ajit Singh, The Economic Times, Jan 2, 2013,

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Kingfisher Airlines Exhibit 1 Defunct airlines in India Commenced Airline Ceased operations Headquarters operations 2007 Merged into Air Deccan 2004 Bangalore Kingfisher Airlines 2006 Taken over by Air Sahara 1991 Jet Airways and Mumbai rebranded as JetLite Air India Cargo 1954 2012 Mumbai Jetlite 2007 2012 Mumbai Indian 1953 2011 New Delhi Aryan Cargo 2005 2010 New Delhi Express Paramount Airways 2005 2010 Chennai MDLR Airlines 2007 2009 New Delhi Indus Airways 2006 2007 New Delhi Crescent Air Cargo 2000 2006 Chennai Airways 1995 2001 1991 1999 New Delhi Bhaarat Airways 1995 1999 Mumbai Elbee Airlines 1994 1998 Mumbai Damania Airways 1993 1997 Mumbai[10] 1981 1997 New Delhi Vijay Airlines 1981 1997 Chennai 1994 1996 Mumbai VIF Airways 1993 1996 East-West Airlines 1992 1995 Mumbai Pushpaka Airlines 1979 1983 Mumbai Darbhanga 1950 1962 Kolkata Aviations Airways (India) 1945 1955 Kolkata Limited Air Services of 1936 1953 Mumbai[9] India

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Himalayan 1948 1953 Kolkata Aviation Orient Airways 1946 1953 Kolkata Indian Overseas 1947 1950 Mumbai Airlines Ambica Airlines 1947 1949 Bombay Jupiter Airways 1948 1949 Mumbai Indian Transcontinental 1933 1948 Kolkata[9] Airlines Tata Airlines 1932 1946 Mumbai[9] Indian National 1925 1945 Delhi[9] Airways Irwaddy Flotilla & 1934 1939 Chennai Airways Himalayans Air Transport & Survey 1934 1935 Kolkata Limited Indian State Air 1929 1931 Kolkata Service (ISAS) Skyline NEPC Chennai

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Exhibit 2 Acquisitions by UB Group Vijay Mallya’s Ventures

1 1978 Vijay Mallaya gets involved with UB Gr. Co. Carew Phipson, under his father Vittal Mallya. The Group was a diversified entity with beer, spirit, food and trading business 2 1983 At 28 takes over as UB Group Chairman after his father’s death 3 1985 Along with Manu Chhabaria bids for Shaw Wallace from its foreign promoters. Gets entangled in FERA. Loses deal. 4 1988 Effects leveraged buyout of Berger Paints. Divested in 1996 5 1989 Acquires loss making Mangalore Chemicals and Fertilisers and turns it around. 6 1991 Starts pruning diversified portfolio. First sells Dippy’s and later Kissan to HLL 1994. 7 1994 Takes Kishore Chhabaria, younger brother of Manu as partner in Herbertson. Gets enmeshed in a Board room battle over control. Buys out Kishore for Rs. 134 Cr. In 2005 8 1997 Enters the U.S. Craft brewing industry with the buyout of Mendosino Brewing 9 2001 To pre-empt competition from MNCs like SABMiller, acquires associated Interasia GMR Breweries 10 2002 Buys 85% stake in Triumph Distillers & Vintners Owning, Gilby’s Green label whisky 11 2004 Wins a long running case against Manu Chhabaria regarding Shaw Wallace. 12 2005 Acquires Shaw Wallace for $300 mn from Chhabarias. Launches Kingfisher Airlines 13 2006 Starts scouting for international acquisitions spirit and wine industry. Launches bid for Champagne Taittinger but withdraws in face of opposition. 14 2007 Acquires Scottish Distiller Whyte and Mackey for $ 1.2 bn 21

Buys controlling interest in Air Deccan and take ownership interest in Spykar F1 Team along with Dutch Tycoon Michael Mol. 15 2008 Enters into discussions with Viageo Plc. To sell stake but talks fail. Mallaya successfully bids for Bangalore IPL Team 16 2009 Dutch brewer Hineken becomes Mallya’s partner in beer business after buying out Scottish and New Catle 17 2010 Kingfisher airlines losses widen. Mallya seeks debt recast 18 2011 Sells 42.5% stake in F1 Team to Sahara India 19 2012 Mallya restarts talks with Diego as KFA operations are hit Banks refuse further debt recast

Source: “Winning Some, Losing Many”, Times Business, Nov. 16, 2012

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