Reposted about 232 days 4 hrs 2 min 4 sec ago by dubai-sheikh and 1 others
Buying loss making companies when you are at position of strength (high oil prices, earning in dollars) is what separates the wise from the foolish. If Emirates dismisses an airline simply arguing that it is loss making without considering the brand value, infrastructure, the lucrative Indo-Gulf routes, and a firm foothold in a country where airline industry is still in its adolescence, they will be fools.
Only the wise are able to opportunity in a calamity. Fools tend to throw out babies with the bathwater.
Reposted about 237 days 22 hrs 41 min 56 sec ago by Cool_Head and 1 others
KFA is being branded as premium airline in the country and has good fleet, personnel and other requisite resources. KFA needs much needed cash and the brand like Emirates would definitely filip the brand of KFA
I doubt if KFA in the short term will have any buyers, a company that has shareholders would never dare to invest in a dead company and its not easy to that. Considering the current scenario its quite risky to even if FDI 49% is allowed here.
Any company which does an acquisition/partners would obviously be looking for some good returns and here investment would be around 10k crore in the initials. Even if somebody gets into this, it would not be easy to recover in the short run.
So far the guestimate of the debts of KFA was about Rs.5000 - 7000cr. But the figures as on 31-03-2012, as published ( an article appeared in sunday english daily) it is about Rs.9000 cr Plus. The artilce go on saying that the entire UB empire is making loss over Rs.4000cr a year in KFA and UB holdings, and making profit less than Rs.200 cr in all other businesses together. The net loss of the group is in vicinity of Rs.3800 to 3900cr per year. After reading the article the question i got is " forget about Kingfisher, whether the king himself will survive ? If so how?
You see it is linked very much with oil even though Dubai emirate has little oil. I had pointed out the link in one of my posts below. It is essentially the investor confidence about the wealth of the region (which is entirely dependent on oil) that drives the growth of Dubai. Even though Dubai is seen to have progressed on to unrelated sectors like medicine, technology, trade etc. if oil prices crash, all these could just disappear. Why? Arab culture has stifled free thinking and needs expatriates to do the actual innovation and scientific work. These guys stay only as long as they are confident that their capital is assured. They have little confidence in Arabs` own scientific attitude. The investors are also aware that the moment oil stops flowing these totalitarian governments could clamp down on investments and it maybe difficult or impossible to get them out of the country.
It is like the Napolitans live below Vesuvius, and prosper in its rich volcanic soil. They know how dangerous Vesuvius can be, but till it shows signs of erupting they are staying put. The same with Dubai.
In 2008 investors got a warning and they took off. That turned out to be a false alarm so they are coming back. But astute investors in Dubai are likely to keep one foot on the doorway henceforth, as long as energy scenario of the world is uncertain.