Air India should be bought by another airline, feels govt

DELHI: The government may prefer that an airline acquires Air India even if it means selling the domestic and international operations separately, senior officials said.

“We also want continuity for the existing staff which could only happen if it is being taken over by another airline,” said one of them, reports The Economic Times .

While IndiGo has said it may be interested in Air India’s international business, there have been reports that some private equity investors had been eyeing a possible stake-sale process. The Tata Group, which has stakes in Vistara and AirAsia India, has also been mentioned as a possible suitor.

Analysts said the government shouldn’t seek to keep out potential bidders, given the state of the carrier.

“The government should not limit its options to just airlines as anyone who understands the aviation business will be able to run it,” said Mark Martin, founder and CEO of Martin Consulting.

The key burden for any investor in Air India would be its Rs 50,000 crore debt. About Rs 33,000 crore of this is on account of working capital loans.

Its annual interest outgo of Rs 4,500 crore is about 21% of turnover. Among the options being explored on restructuring Air India’s debt, the government is considering an option where interested parties may make part payment upfront to the government.

An acquirer would then take over the remaining debt, which would be restructured by lenders based on a viability plan.

“Such a move will ensure that the debt portion may be reduced but also give the selected bidder time to turn around the firm,” said the official cited above.


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