Effect of Merger on Financial Performance: A Case Study of Kingfisher Airlines

Abstract

In the era of 21 century, for obtaining benefits of synergy merger and acquisitions, commonly known as M& A, are the most widely used strategies of the organizations. To obtain benefits such as entering in new market, cost reduction, cross selling, risk diversification, increasing shareholder’s value, M&A can be done within the industry or outside the industry . Media provide reports on daily basis for various updates of any of the industry either Bollywood for latest releases, sports for world cup matches or stock market for ups and downs. Aviation industry of India is also in news for its various deals of Merg er and Acquisition in recent years. This paper has focused on one of these mergers - Air Deccan and Kingfisher Airlines. The main objective of this paper is to analyze financial performance of Kingfisher Airlines pre and post - merger. Financial performance h as been analyzed with the help of ratios specifically in the areas of profitability, Liquidity and Leverage. Further T - test has been used to determine the significance differences in these financial performance areas. Data has been collected from various A nnual Reports of Kingfisher Airlines for pre and post - merger period. Analyses shows that there is no significant benefit has been achieved by Kingfisher after the merger. Analysis also shows that there is no improvement in company’s return on equity, inter est coverage, earnings per share and dividend per share.