1. Race for Air India heats up as Jet Airways, Spicejet board the flight to take over Maharaja’s throne

Race for Air India heats up as Jet Airways, Spicejet board the flight to take over Maharaja’s throne

Major Indian aviation companies Jet Airways and Spicejet too have thrown their hat in the ring to acquire Air India, joining the race alongside IndiGo and Tata Group, even as the troubled national carrier’s disinvestment has reportedly moved to the backburner with no visibility on completion of its stake sale by early 2018, as was being contemplated earlier.

By: | Published: November 30, 2017 12:51 PM
narendra modi, air india sale, Air India Ltd, Moody’s Investor Service, Tokyo, london, InterGlobe Aviation Ltd, india biggest commercial airline Jet Airways and Spicejet may also join the race to take over Maharaja from the government keen to offload the money guzzling and fast declining air carrier. (Image: PTI)

Major Indian aviation companies Jet Airways and Spicejet too have thrown their hat in the ring to acquire Air India, joining the race alongside IndiGo and Tata Group, even as the troubled national carrier’s disinvestment has reportedly moved to the backburner with no visibility on completion of its stake sale by early 2018, as was being contemplated earlier.

Jet Airways and Spicejet may also join the race to take over Maharaja from the government keen to offload the money guzzling and fast declining air carrier, The Times of India reported citing unidentified sources. So far, Tata Group, IndiGo and Bird Group have expressed interest in buying Air India. Air India’s 14 percent domestic and 17-18 percent market share in the international traffic makes it an attractive acquisition target, but its heavy debt burden acts as a potential deterrent. In addition, considering Air India’s extensive traffic and its international slots, major players with ambitions to expand overseas would be keen to bid for it.

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 profitable in 10 years, since at least the year 2007.

The government in September this year invited applications from investment bankers, law firms and other entities to advice on the strategic stake sale of the flag carrier. The government had decided on strategic disinvestment of loss-making Air India by early 2018, which is guzzling up taxpayers’ money ridden with inefficiencies and mismanagement.

Air India’s market share in the domestic market has fallen to 14 percent in 10 years from 35 percent a decade ago, placing it third in the national ranking, behind Indigo, which commands about 40 percent of Indian skies, and Jet Airways, which has about 16 percent of the share. Air India also flies overseas and commands 17 percent of the international traffic from and into India. 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.

Get latest news and updates on Auto Expo 2018, check breaking news on Budget 2018, like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top