InvestorQ : What is the latest on Air India sale? Is the government likely to sell Air India before the 31st of March this year?
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What is the latest on Air India sale? Is the government likely to sell Air India before the 31st of March this year?

2 years ago

In fact, the government has taken up the Air India sale case on a priority basis. Indian officials have already met with as many as nine companies during their respective road-shows to gauge interest in a stake sale in Air India. The government is keen to not repeat the mistakes of 2018 when a very rigid approach to divestment ensured that it did not go through at all and no bids were received. Here is the progress on the Air India sale.

· Government officials have already met executives of top aviation companies including British Airways, IndiGo, SpiceJet and Tata Sons. However, not much was forthcoming about these meetings as discussions are still at a very preliminary stage.

· The government has not forgotten the lesson of 2018 after the attempt to sell Air India did not elicit any interest. The sale of Air India is critical if the government is to get anywhere close to bridging a widening fiscal deficit. This fiscal deficit is likely to be worsened by dismal tax collections this year as well as a $20 billion corporate tax cut payout.

· Air India has hardly made any money since 2007 when the domestic and the international operations were merged under one head. For the last financial year, Air India posted a net loss of $1.2 billion. It also has nearly $8.4 billion in total debt.

· Most of the airlines are actually eying the lucrative hidden assets of Air India and this has been a source of attraction despite the losses. These properties include prized slots at London’s Heathrow airport, a fleet of more than 100 planes, an army of trained high-quality pilots and crew.

· The sweetener this time around is that the government is taking on most of the airline’s debt, leaving the potential buyer with just $3.26 billion of liabilities linked to plane purchases.

The government is desperately in need to funds and the airline is desperately in need of a private partner to come and bail out the business. The aviation minister has already underlined that Air India will have to wind up operations if it cannot find a buyer. The pressure on the industry is so high that Jet was forced to wind up last year after being low on funds.