- India’s national carrier Air India will have to close if a revived sale offers to sell the debt-laden airline fails to find a buyer.
India’s national carrier will have to shut down if a revived attempt to sell the debt-laden airline fails to find a buyer, a year and a half after an attempt to sell the high-profile resource flopped, the country’s aviation minister said.
“If it’s not privatized, the airline will have to close,” Hardeep Singh Puri told the Indian Parliament on Wednesday. “When we invite bids, we’ll see how many bids are coming in.”
A successful Air India sale is essential for Prime Minister Narendra Modi to help bridge a growing fiscal deficit worsened by dramatic tax collections and a $20 billion cut in corporate tax. Since its merger with the state-owned domestic operator Indian Airlines Ltd in 2007, Air India, which began as Tata Airlines in 1932 and later became state-owned, has not made money. With $11 billion in debt, the global carrier is saddled.
A committee of ministers overseeing Air India’s sale has already agreed to sell the carrier’s entire government stake and its low-cost, overseas subsidiary, Puri said in a separate written reply to the parliament. Pumping more taxpayer funds into the airline in a competitive market “would not be the best use of the government’s limited financial resources,” said Puri.
Modi’s administration is considering a proposal to exclude $7 billion from the airline’s debt in a bid to attract buyers, people with knowledge of the matter said earlier on Wednesday.
Separately, on Wednesday, the Indian National Company Law Tribunal issued a notice to Air India asking why insolvency proceedings against the state-owned carrier should not be initiated in response to a pilot’s petition seeking outstanding salary duties, according to people with knowledge of the order.
Over the years, Air India has become synonymous with Indian pride with its Maharaja mascot. Founded by Jehangir Ratanji Dadabhoy Tata, Air India took off flying the mail in then-undivided British India between Karachi and Bombay. Once the airline became commercial, its advertisements featuring Bollywood actresses, high-end champagne and porcelain ashtrays designed by Salvador Dali quickly became popular.
Recently in October, Approximately 120 Airbus A-320 pilots submitted their resignation after the AI management did not pay attention to their wage hike demands and promotion.
This came in the background of the decision of the Central Government to initiate the process of divesting the stake of Air India, which has a debt of more than € 60,000 crore.
In September, Air India reported an operating loss of around Rs. 4,600 crore in the last financial year due to higher oil prices and loss in foreign exchange. The carrier which is deep in debts is expected to turn operationally profitable in 2019-20.