Selling Air India In Pieces

न्यूज़ वर्ल्ड इंडिया | 1
| July 9 , 2017 , 14:53 IST

In a recent development to Modi cabinet’s decision to sell the state-owned carrier Air India, words are that the government is considering selling the government carrier in parts to make the deal more attractive to potential buyers.

Last month, the NDA-led government in views of Air India’s diminutive 14 percent share in the marker and heavy debt burden, decided to sell to the loss-making carrier.

As private carriers such as IndiGo and Jet Airways started growing in aviation, the once largest carrier ‘Air India’ was limited to a minimal market share.

Air India is neck deep in debt with an estimated debt burden of $8.5 billion (approx. Rs. 55,000 crore). Since 2012, the government has granted over $3.6 billion (approx. Rs. 23,200 crore) in order to revive the waning carrier.

There have been attempts to close or sell the Airline as well; however, none of them even came close to success.

The Prime Minister’s office has set the first half of the next year as the deadline start the sale process, reported news agency Reuters.

The report added, “The timeline is ambitious and the process fraught, with opinion divided on the best way forward: should the government retain a stake or exit completely? And should it risk being left with the unprofitable pieces while buyers pick off the better businesses?”

A labour union of 2500, out of the 40,000 Air India employees is already opposing the government’s decision to sell the airline. In views of the unions, some analysts say the government might prefer keeping the airline in Indian hands.

So far, two potential suitors have shown early interest, the Tata Sons conglomerate and IndiGo.

Officials set to take care of the sale, however, are grappling with the sheer scale of this exercise. Air India has six subsidiaries with a total estimated worth of about $4.6 billion (approx. Rs. 30,000 crore). It also has an estimated $1.24 billion (approx. Rs. 8,000 crore) worth of real estate, including two hotels.

The operational head of Air India between 1997 and 2010, Jitendra Bhargava said, “The exercise is complex and there is no easy way out. At this juncture, selling even part of Air India is far from certain.”

The prime minister's office and the civil aviation ministry has declined to comment on the sale of Air India, but officials from PMO and Civil aviation ministry did meet Ratan Tata, the patriarch of Tata Sons.

IndiGo on Thursday also said that it would be interested in buying the carrier’s international operations.