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Sunday, October 7, 2012

airline business: castles in the air

Where are the earnings?
 

Jet Airways - all debt



Kingfisher - piled up losses



Air India - ? Any other airline......? The story may not be very different.

Physical growth does not always mean maximization of shareholder wealth. The capital that goes into a business has to translate into cash profits at a decent rate on a long-term basis. If not, the business is destined to destroy wealth.

When you are in a business that is fundamentally uneconomical, it is not a good idea to continue to be in it.


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