Financial Distress Air Line Industry - 3947 Words

UNIVERSITY OF MYSORE DEPARTMENT OF STUDIES IN BUSINESS ADMINISTRATION B. N. BAHADUR INSTITUTE OF MANAGEMENT SCIENCES MANASAGANGOTRI MYSORE 570006 KARNATAKA, INDIA Seminar Paper on Financial Distress and Restructuring A Case Study of Air India Ltd Kingfisher Airlines Ltd Submitted to Dr. B. Shivraj Professor, DOSBA, UoM Submitted by Mr. Prasad V. Daddikar MBA IV Semester, Roll No. 50 Reg. No. 10MBO102 INTRODUCTION Financial distress is a term in Corporate Finance used to indicate a condition when promises to creditors of a company are broken or honored with difficulty. Sometimes financial distress can lead to bankruptcy. Financial distress is usually associated with some costs to the company;†¦show more content†¦Such models have been used by commercial banks and creditors to assess the creditworthiness of commercial users, by investors to measure a firm’s risk of insolvency, and by business managers to assess and manage the financial turnaround of distressed companies. PERFORMANCE MEASUREMENT OF INTERNATIONAL AIRLINES †¢ The airline industry, like many other industries, is increasingly exposed to competition. Increased competition has two effects on firms: it creates downward pressures on output prices, and it creates incentives for improving productivity and efficiency. †¢ Many airlines have been forced to undertake major restructuring in order to meet these challenges. Many researchers have used different model to decompose changes in airline profitability into two components: productivity and price recovery ability. †¢ The study concluded that increased competition in international air transport markets has put pressures on carriers’ ability to raise prices. However input prices, like labor, fuel, materials, flight equipment, ground property and equipment have been increasing. †¢ They also demonstrated that airlines have made tremendous effort to improve efficiency to counteract such trends, yet large fluctuations in profitability are still an ongoing reality. Due to these fluctuations in airline fortunes, early warning systems of imminent distress are of benefit to management and airline stakeholders such as creditors and investors. †¢ No predictionShow MoreRelatedThe Cause of Financial Distress in Airlines Industry Introduction According to International Air1400 Words   |  6 PagesThe Cause of Financial Distress in Airlines Industry Introduction According to International Air Transport Association (IATA), global airline industry has a history of 100 years (2014). 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