India’s largest airline IndiGo which had expressed its interest in buying an equity stake in the international operations of troubled national carrier, is the only company to show official interest in Air India, ET Now reported, citing the Civil Aviation Secretary.
Earlier, Bird Group, which provides various aviation services such as aircraft navigation, ground handling, customer management and logistics had formally written to the Civil Aviation Ministry expressing its interest in the debt-ridden Air India for its ground handling business, according to CNBC TV18. Civil Aviation Secretary Rajiv Nayan Choubey, confirming the development had told reporters that the group has sent an expression of interest (EoI) for the same.
Earlier, IndiGo said that it is interested in buying Air India’s international operations. Given IndiGo’s leadership in the domestic market with a whopping 41% share and its aggressive plans to expand overseas, it augurs well for the company. Air India is a distant third largest player in the Indian civil aviation market with a paltry 14% share. While that revenue would be a welcome addition to IndiGo’s kitty, it is Air India’s leadership in overseas passenger traffic with 17% of the international skies in its portfolio which is the main attraction for IndiGo, which itself has major ambition to quickly start adding international destinations to its network.
Taking forward the process for Air India divestment, the government had invited applications from investment bankers, law firms and other entities to act as advisers for strategic stake sale of the flag carrier, as per PTI reports. The Finance Ministry said in an official release last week, “The Government of India has in-principle decided to consider the disinvestment of the AI Group as a whole or its constituents fully or part thereof through strategic sale with transfer of management control.”
Air India, under intense competition from leaner, more efficient and often-cheaper private airlines, is reeling under a debt of over Rs 52,000 crore, with about Rs 28,000 crore in working capital debt, and about Rs 4,000 crore in interest burden alone. It has not turned profit in 10 years, since at least the year 2007.
Air India has guzzled up taxpayer money over and over again but to no effect. The carrier has received bailout packages worth about Rs 24,000 crore out of a total Rs 30,000 crore approved, but has failed to revive its fortunes amid private airlines continuously gaining market share.