The founder of the airline established Kingfisher Airlines in 2005, a premium full service carrier (FSC), with the aim of being a market leader by 2010.
By 2006, as most LCCs and some FSCs incurred losses, the Indian aviation industry was headed for consolidation.
Air Deccan, founded by Captain G. R. Gopinath, was India's first LCC offering low fares for early birds. In March 2007, Air Deccan was looking for strategic investors and had garnered more than 20 percent market share.
Mallya was looking for opportunities to acquire the LCC, as all the FSCs including Kingfisher had hurt. With negative earnings before interest, depreciation, tax, and aircraft rentals (EBIDTAR), and no fiscal or stock market comparables to value the loss-making LCC, Mallya came up with an offer of a bit more than the quarter of its stake for Rs. 5,500 million
As Kingfisher and Air Deccan inherited distinct business models, brands, leadership and direction styles, and organisation culture, industry analysts and aviation experts were divided on the valuation and offer of Kingfisher, and alliance of the two creators' leadership style and vision.
Publication Date: 10/14/2010
This is just an excerpt. This case is about Finance
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