Abstract
The COVID 19 has brought down aviation industry to its knees. Till March 2020, before getting sense of distraction by this pandemic, Indian economy was eager to take off to reach further heights including the Aviation Sector. The growing middle class was the base reason for the prosperity in the Aviation Sector, but the pandemic has changed the whole scenario at least temporarily for next couple of years. However, even before the pandemic the history is showing that almost all Indian airlines companies are in losses. Jet Airways is almost grounded permanently whereas Kingfisher Airlines is now a history. Being one of the important sectors for the economy and even for the investors, an attempt is made to find out the reasons behind financial failure of selected Indian Aviation Companies by using Altaman's Z Score Model and Pilarski's P -Score Model and various problems faced by them. The secondary data is collected mainly by using Annual Reports of 4 leading Airlines Companies in India. Analysis is showing that various internal and external factors which are responsible for such pathetic financial position of these companies and a serious overhauling is required not only by those companies but also from the government side.
Highlights
Every Company faces the problem of liquidity or operating efficiency in its life
When a company is landing into financial distress it directly impacts on the value of the company’s business
The results showed that Altman’s (1968) Z-Score model has the least accuracy of prediction, while the revised model had better results
Summary
Every Company faces the problem of liquidity or operating efficiency in its life. when a company is landing into financial distress it directly impacts on the value of the company’s business. Company is not able to generate sufficient EBITDA to service its interest payment and principle loan amount. It is a very common situation where funds required for the growth are funded by external parties, gradually company is either losing its top line to the competitors or management is not efficient enough to keep the operating costs under control which is pressurizing EBITDA and Operating margins and ends with default in making payment to lenders and other external parties. Excess investment in fixed assets is directly impacting on asset efficiency which in turn again pressurizes top line and cash flow generation. Poor emphasis on product research and development, no quality control, poor sales promotion, inadequate human resources, exchange fluctuation and so Universal Journal of Accounting and Finance 9(6): 1222-1234, 2021 on so forth, Recently we have seen number Corporate picture which pressurizes working capital requirements of Groups are on the verge of collapse because of COVID 19 the company and its profitability
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
