Kingfisher Airlines was established in 2003 and ceased operations when its license was cancelled on 20 October 2012. It is owned by the Bengaluru based United Breweries Group. The airline started commercial operations on 9 May 2005 with a fleet of four new Airbus A320-200s operating a flight from Mumbai to Delhi. It started its international operations on 3 September 2008 by connecting Bengaluru with London. Kingfisher's head office is located in Kingfisher House Western Express Highway Vile Parle (E) Mumbai – 400099 India and its registered office is located in UB City, Bangalore."." Kingfisher Airlines. Retrieved 12 January 2012. "Kingfisher Airlines Limited Kingfisher Airlines Limited The Qube, C.T.S. No. 1498 A/2, 4th Floor, M.V. Road, Marol, Andheri (East), Mumbai – 400 059 India "ENS Economic Bureau. "Jet, Kingfisher trying to fly in formation." Indian Express. Tuesday 14 October 2008. Retrieved 25 August 2009. Its head office was previously in the Kingfisher House in Vile Parle (East), Mumbai."Contact Us ." Kingfisher Airlines. Retrieved 25 August 2009. "Kingfisher Airlines Limited Kingfisher House Western Express Highway Vile Parle (E) Mumbai – 400099 India " In 2012 Vijay Mallya was trying to sell the Vile Parle Kingfisher House."Kingfisher house, Gandhi relics up for sale?" Mid-Day. 12 March 2012. Retrieved 15 March 2012. The airline had shut down its operations when on 20 October 2012 the DGCA suspended its flying license. This suspension had been due to failure to give an effective response to the show-cause notice issued by DGCA. However, The airline had locked out its employees for several days before this suspension. On 25 October 2012, the employees agreed to return to work. On 7 June 2010 Kingfisher became a member elect of the Oneworld airline alliance when it signed a formal membership agreement. Kingfisher confirmed on 20 December 2011 that it will join the Oneworld airline alliance on 10 February 2012. Kingfisher would have been the first Indian carrier to join one of the big airline alliances.Kingfisher to officially join Oneworld Alliance in February 2012 However, on 3 February 2012, owing to bad financial situation and two days after the International Air Transport Association (IATA) clearing house suspended Kingfisher Airlines; the airlines participation to Oneworld has been put on hold.

Financial unrest The crisis started with the freezing of the bank accounts of the airline by the Indian Income Tax Department. Following are the year by year financial results of Kingfisher Airlines, all values are depicted in Indian rupee (INR) crore except EPS, which is in plain INR.

# From To Months Total Income Cost Net Profit EPS 01 Apr-05 Jun-06 15 1,352 1,689 −337 −68 02 Jul-06 Jun-07 12 2,142 2,562 −420 −42 03 Jul-07 Mar-08 09 1,546 1,734 −188 −11 04 Apr-08 Mar-09 12 5,577 7,186 −1,609 −55 05 Apr-09 Mar-10 12 5,271 6,918 −1,647 −54 06 Apr-10 Mar-11 12 6,496 7,523 −1,027 −16 07 Apr-11 Sep-11 06 3,410 4,142 −732 n/a Total 78 25,794 31,754 −5,960

In November 2010, Kingfisher Airlines completed restructuring of debt, with all 18 lenders agreeing to cut interest rates and convert part of loans to equity. Lenders have converted debt into preference shares which will be converted into equity when the airline lists on the Luxembourg Stock Exchange by selling global depositary receipts (GDR). Shares will be converted into ordinary equity at the price at which the GDRs are sold to investors. Besides the debt which will be converted into preference shares, another debt has been converted into redeemable shares for 12 years. Airline's average interest rate is now down to 11%, helping the airline save crore every year on interest cost. Consortium of banks was represented by SBI Capital Markets. Kingfisher Airlines Ltd has informed BSE that the board of directors of the Company at its meeting held on 25 November 2010, has approved a Debt Recast Package (DRP) with lending banks, following a one-time relaxation in restructuring guidelines sanctioned by the Reserve Bank of India. The salient features of the DRP include:

Conversion of debt of up to from lenders into share capital. Conversion of debt of up to from promoters into share capital. Re-scheduling of repayment of the balance debt to lenders over 9 years with a moratorium of 2 years. Reduction in interest rates. Sanction of additional fund and non-fund based facilities by the lenders.

The recast plan involved the issuing of the following types of preference shares.

Share type Dividend Quantity Price Recipient Redeemable Cumulative Preference Shares 8% 575,000,000 Consortium of lenders Compulsorily Convertible Preference Shares 7.5% 780,000,000 Consortium of lenders Compulsorily Convertible Preference Shares 7.5% 648,000,000 United Breweries (Holdings) Ltd, Kingfisher Finvest India Ltd Optionally Convertible Debentures 8% 20,000,000 Star Investments Ltd. Optionally Convertible Debentures 8% 30,000,000 Margosa Consultancy Pvt. Ltd. Optionally Convertible Debentures 8% 30,000,000 Redect Consultancy Pvt. Ltd.

In addition to these issues, 9,700,000 units of 6% Redeemable Preference Shares of each issued to United Breweries (Holdings) Ltd. (Promoter Company) were converted to 97,000,000 units of 6% Compulsorily Convertible Preference Shares of each. Kingfisher Airlines, in November 2011 was attempting for a second debt recast. However a second debt recast has been ruled out by the Government of India. The Minister of State for Finance made a statement on 9 December 2011. Kingfisher Airlines has pledged its brand as collateral with its lender consortium for . The brand valuation was done by Grant Thorton in 2010. Reportedly the Brand has been valued and loan raised worth triple the carrier's market value. On 6 July 2011, pursuant to requirements prescribed under the Debt Recast Package Kingfisher Airlines' founder companies, United Breweries (Holdings) Ltd and Kingfisher Finvest Ltd, have pledged their entire stake in the airline with certain of its lenders. United Breweries Holdings Ltd held 199,598,555 shares (representing 40.1% of total outstanding shares) in the airline and has pledged all the shares to lenders. At the same time, Kingfisher Finvest Ltd held 63,478,570 shares (representing 12.75% of total outstanding shares) has pledged its entire holding to the lenders.

Erosion of net worth

In September 2011, the chairman and managing director of Kingfisher Airlines made following disclosure to the Bombay Stock Exchange(BSE); "The Company has incurred substantial losses and its net worth has been eroded. However, having regard to improvement in the economic sentiment, rationalization measures adopted by the Company, fleet recovery and the implementation of the debt recast package with the lenders and promoters including conversion of debt into share capital, these interim financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities" This filing was widely covered by Indian and international print and electronic media and analysts. It was stated by analysts and media that the company needed capital infusion to remain viable and this has pushed shares to near historic lows. Kingfisher Airlines Lenders later stated that they consider that company is viable. On 15 November 2011 the airline released poor financial results, indicating that it was "drowning in high-interest debt and losing money". Mallya indicated that his solution was for the government to reduce fuel and other taxes. The government was engaged in assessing whether to bail out the company and other airlines or let market forces determine which ones survive.

Bankruptcy

Kingfisher received a notice from the Airports Authority of India in February 2012 regarding accumulated dues of . The airline was operating on a cash and carry basis for the last six months, with daily payments amounting to On 9 December 2011, MC Joshi, CBDT chairman announced that it is considering legal action against Kingfisher for not paying tax and may go for prosecution. As of 10 January 2012, Kingfisher Airlines has service tax arrears of . The Ministry of Finance has given a concession to Kingfisher and instructed them to pay the dues by 31 March 2012. In January 2012, Kingfisher paid towards its dues for December 2011 and part of the arrears. Kingfisher Airlines has a staff strength of 6,000 and spends on salaries a month. According to the first quarter financial results, it has under the employees cost head, which has increased from during the same quarter last year. Kingfisher Airlines delayed salaries of its employees in August 2011, and for four months in succession from October 2011 to January 2012 In a report to Directorate General of Civil Aviation (DGCA) on 9 January 2012, Kingfisher had stated that it has paid past (salary) dues to 60% of its employees and that by 31 January 2012, payment of December 2011 salary for all its employees will be done. Protesting at the delays in payment, Kingfisher pilots started making in-flight announcements citing "It is their sense of duty towards the guest that is making them fly despite not being paid salaries for the past two months". Kingfisher also defaulted on paying the Tax Deducted at Source from the employee income to the tax department.

Bank arrears

Kingfisher Airlines had not paid some bankers (Lenders) as per the Debt Recast Package (DRP) with lending banks. Till the end of December 2011, the arrears were estimated to be to . Lenders hence had told Kingfisher Airlines to clear its dues before they can release any more money sought by the Airline. Ravi Nedungadi, chief financial officer of UB Group however said that the arrears were . If arrears were not paid in time (December 2011); Kingfisher Airlines would automatically have been treated as NPA, (Non-performing asset). On the last working day of the third quarter of financial year 2011–2012, Kingfisher Airlines made one month interest amount to the banks; thus saving the account from becoming a non-performing asset.

State Bank of India (SBI) on 5 January 2012 declared Kingfisher Airlines a non-performing asset. SBI is the largest creditor and leader of the consortium of banks in the DRP (Debt Recast Package) and has an exposure of . By February 2012, Kingfisher has been declared a non-performing asset by the following banks; State Bank of India(SBI) Bank of Baroda Punjab National Bank(PNB) IDBI Bank(IDBI) Central Bank of India Bank of India(BOI) Corporation Bank

Aircraft lease and fuel dues

Since 2008, it has been reported that Kingfisher Airlines has been unable to pay the aircraft lease rentals on time. Kingfisher Airlines has grounded 15 out of 66 aircraft in its fleet as it was unable to meet the maintenance and overhaul expenses. GECAS: In November 2008, GE Commercial Aviation Services (GECAS) threatened to repossess four leased planes in lieu of default. Kingfisher Airlines initially denied that it missed the payments. GECAS had filed a complaint with DGCA saying Kingfisher had defaulted on rentals for four Airbus A320 aircraft, and sought repossession of the planes. In January 2009, The Karnataka High Court rejected petition by Kingfisher Airlines to restrain GECAS from taking any step to deregister and repossess the 04 aircraft in dispute. As a result, Kingfisher had to return the A320 aircraft to GECAS. DVB: In July 2010, DVB Aviation Finance Asia Ltd (DVB) (a lessor from Singapore), sued Kingfisher Airlines for lease rental default. Case was filed in a United Kingdom court on 16 July 2010 after Kingfisher did not pay for three-month lease rental for Airbus A320 aircraft it leased from DVB.