- Posted November 13, 2012 by
How to Save KingFisher Airlines (India) ?
Current situation: Every stake-holder is at loss.
Imagine current situation continuing for a couple of more months.
Then, it is obvious that share-price becomes Rs. Zero. So, shareholders will lose their stake completely. Employees will lose their salaries that are due. Govt., will lose the taxes due to the govt., and of course, banks will get some percentage based on the properties on which they have legal right to sell.
What if everyone in the above list is flexible and open-minded?
Every stake holder will get something (better than nothing).
KingFisher can offer no cash since there is no cash balance. But, KingFisher can offer shares in lieu of cash payments. Employees can be issued shares in lieu of cash until end of December 2012. They can get cash salary for the period worked from Jan 1st,’13. Employees will agree if shares are offered to them at a discounted price such as Rs. Two each. These new shares should have a lock-in period of two years to make sure, share-price will be maintained in the stock-market.
Similarly, lenders need to sacrifice interest on their loans. Principal can be re-paid in the form of shares at Rs. 2 per share. Consider the lowest price of KingFisher, which is around Rs.7 in the market so far. If lenders need interest too, shares can be issued for the total amount at Rs. 3 per share.
Ofcourse, Govt, can be given some stock too. May be at Rs. 4 each to cover ALL the dues including taxes until Dec 31st,2013. Same logic can be applied to air-ports-authority of India, etc.,
How much this costs KingFisher to implement the above plan? Not much, company can afford easily.
What is required now to save the KingFisher?
Open mind and willingness to save the airlines.
For a detailed plan, contact the management consultant (turn-around-consultant in this case) at Sreenivasa.Potti@Gmail.Com