A SWOT analysis gives an overview of all the on going issues and opportunities for the firm. This allows the firm to cope up and increase their market share in competition with others in the market. With the help of a SWOT analysis a firm can work on their weakness with making use of their strengths and given opportunities. In this case with the Kingfisher airlines, leaving apart their strengths, the most important weakness of paying heavy depts to their suppliers and manufacturers, has lead the firm to be in increasing depts since it has been initiated. Rising fuel and labour prices and with high cost used up in the maintenance and manufacturing of their in-air services also hinders the overall growth of the firm. In order to utilize the given opportunities the firm must get rid of their depts to get in some retained profits. One way in which the firm can retain its profits could be by reducing the in-air services, which would in turn reduce the ticketing cost to attract more customers. Along with this, they could also reduce the number of laborers to cope up with rising labour cost problem.
PEST Analysis
Other than the strengths, weaknesses, or threats, these mentioned factors also play an important role in determining their overall stand. In this case, Kingfisher airlines have spent most of its income for providing high-class amenities to their customers. But this can pose problems for the firm during bad economic conditioned along with other political factors affecting the working of the airlines. During recession, when the cost of tickets rise along with other services that they provide, customers usually seek for comparatively cheap airline ticketing costs. Kingfisher on the same, have gone imprecise. Some of these factors have caused huge losses for kingfisher airlines since its initiation.
Porter’s Five-Force Analysis
Apart from internal factors, there are other external influencing factors that may cause a hindrance for the firm. Competitors may pose problems for the existing firm as their market value may reduce compared to their competitors. Demands of the suppliers have to be met as they provide services to the firm such as production of food, packing, transport, etc.
Profit and Loss Account for Kingfisher Airlines
----All figures in Crores----
The P&L accounts for Kingfisher Airlines shoes that the airlines increasingly making losses from the beginning. The reported net profit from June 2007 till March 2011 is decreasing each year, especially from March 2008 to March 2009. As highlighted above, it could be seen that with an increase in power and fuel cost, the employee cost along with the manufacturing cost also increased significantly. This increased the total expenses incurred by the firm. In comparison with the total expenses, the operating profit was significantly low. This lead to an increase in losses. Even the share prices of Kingfisher Airlines have been declining ever since. The majority of their income has been used up due to excess of services that they have been providing, fuel, employee cost, taxes, and other miscellaneous expenses. Even the number of customers for Kingfisher has declined due to heavy ticketing costs.
Share prices for Kingfisher for the last 2 years.
Share prices for Kingfisher for the last 1-year.
This shows that Kingfisher had their depts. Increasing subsequently which lead to their share prices and the market value depreciating.
The share prices for Kingfisher airlines have been constantly decreasing since the year it initiated. During March 2009, Kingfisher have revenues about 11 billion dollars with an average of 2.9 billion dollars quarterly. But during the end of March 2009, the company had a loss of about 3.3 billion dollars and also about 550 million-dollar losses in the second quarter of that year.
----Rupees in billion----
Although the demand for Kingfisher airlines was decreasing, the overall capacity over the many routes was increasing which lead to fares below break-even on almost all of their routes they provided. This lead to huge losses, which can be seen as an increase in the operating expenses and their overall operating loss incurred during the process. The owner of the airlines, Vijay Malaya, had ordered a total of 92 airbus fleet many of which were supposed to be delivered till 2012 and 2013, but looking at his current situation with a total of 16 flights, it can be inferred that he might cancel the orders because since the company is already in losses, it won’t be able to pay for the new flight pre-ordered a fall into a new mess.
Conclusion
It would be better if Kingfisher Airlines shuts down in order to disregard the losses it has been making since the beginning. The company could either terminate its airline services or could either use a different management tool to make its operations more efficient and retain back their profits. They would also require a different organizational structure to be setup in order to function better. If the same trend goes on, problems with the pilots, crew members and other staff’s salaries that have not been paid for the last few months, can become worst. Even it was very hasty on the CMD’s point of view of providing airline services internationally with 2 years of startups. So, basically the whole airline services firm is on a verge of termination because of the problems mentioned. It would be a wise decision if the firm shuts down instead of making losses and creating further problems.
Bibliography
"Management Training and Leadership Training, Online." Mind Tools. N.p., n.d. Web. 04 July 2012. <http://www.mindtools.com/>.
"Kingfisher Airlines Management Threatens Pilots of Shutdown." India Today. N.p., n.d. Web. 05 July 2012. <http://indiatoday.intoday.in/>
"Kingfisher Airlines: Employees Want Two Months' Pay." NDTV Profit Research Insight. N.p., n.d. Web. 05 July 2012. <http://profit.ndtv.com/Research/>.
by
shanilsavla (student)
