Being reported by Reuters tonight, it appears that Kingfisher has been granted a stay of execution and will receive a 16.5 billion Rupee (335 million USD) bailout loan to help the airliner through an extremely rough patch.
As my title states (and it is my opinion), I think it’s a mistake taking perfectly good money and loaning it to an organization that has yet to prove that it can manage its fiscal house. In my real life profession, we have a saying: “You can put lipstick on a pig, but its still a Pig” and I think this situation is a perfect example of that proverb.
I tend to be a jaded cynic when it comes to these handouts whether they are designed to help governments survive (see Greece), help homeowners continuing to own homes they can’t afford to keep and my least favorite, the handout designed to help companies survive. Unfortunately the concept of survival of the fittest does not transcend all things.
I don’t understand what will be different with Kingfisher after receiving this bailout loan. The problems are still there. The symptom(no cash) is being treated, but little effort is being made to diagnose and treat the real problems, whether its lack of passengers, cost of fuel, or cutthroat competition. It’s the typical fiscal mismanagement you find when you are treating the symptoms, but not treating the cause of the problems. When it’s current lenders no longer want to give Kingfisher a lifeline why is the Indian Government spending its own money? Do they not have more pressing issues for their constituents? This bailout is presented as a loan, but does anyone think for a moment that Kingfisher will be able to repay it when it can’t even afford to cover salary and fuel costs?
Maybe I am unfairly judging Kingfisher, but this has been an ongoing saga that has lasted for months, and each successive development seems to only add nails to the coffin. Hopefully I’ll be proven wrong, but why do I have that funny feeling that I am right about Kingfisher, and its only a matter of time until it becomes a casualty that could have been prevented.