PM Modi-led government on June 28, gave the approval to privatise beleaguered Air India. It is the initial step in the process that will witness the government offload an airline struggling to turn a profit in the face of growing competition from low-cost rivals. In the highly competitive Indian aviation market, Air India, the country’s flag carrier, has long been struggling. The airline was given a bailout package in 2012 by the UPA government of which it has so far received Rs 24,000 crore. Meanwhile, several airlines have expressed interest in buying a stake in the airline, including IndiGo and SpiceJet. Another name which has been added to that list is Tata Group, which incidentally started the airline.
In May 2017, government think-tank NITI Aayog had suggested a full disinvestment beginning with hiving off its profit-making subsidiaries. The airline has total liabilities of about Rs 60,000 crore of which Rs 52,000 crore is bank debt. It owes Rs 8,000 cr to oil PSUs and Airports Authority of India. Rs 4,500 cr is its annual interest outgo. The airline is currently surviving on a government bailout package of Rs 30,000 crore. It is unclear as to what will be the quantum of divestment. It will be decided by a ministerial group. Meanwhile, here are the companies which have reportedly expressed interest in buying a stake in Air India:
1. INDIGO: Interglobe Aviation Limited or IndiGo on June 29, expressed interest in an investment in Air India. This came just a day after the Union Cabinet gave an ‘in-principle’ nod to disinvest its stake in the national carrier. Civil Aviation Secretary Rajiv Nayan Choubey confirmed that executives of IndiGo had formally written to the ministry expressing interest. IndiGo said in a letter it would be interested in buying out the International operations of Air India and its low-cost wing, Air India Express. If that was not possible, it would like to buy the entire Air India flight operations, including domestic, IndiGo President Aditya Ghosh said in the letter. Meanwhile, Choubey told reporters, “Post the cabinet decision, we have received an expression of interest for Air India from IndiGo. They have said that they are interested in Air India.”
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2. TATA GROUP: No one understands Air India better than the Tatas. JRD Tata not only founded Tata Airlines that later became Air India but he stayed on as chairman for 25 years. Now, speculations are rife that Tata Group may buy a stake in Air India. Reports have emerged yet again that the Tata Group, one of the country’s largest conglomerates, is holding discussions with government representatives about buying a stake in the debt-ridden airline. The company, of course, hasn’t confirmed the speculations but if true, we may be looking at the national airline making a return to its place of birth. Tata Group already runs Vistara, in conjunction with Singapore Airlines and AirAsia, in a joint venture with AirAsia Berhad.
3. SPICEJET: Low-cost carrier SpiceJet, which was recently in news for praise by the US President Donald Trump for placing a huge $22 billion order for buying 100 aircraft from Boeing, is also reportedly in the race to buy Air India, BTVi said citing unidentified sources. Other reports have said that the aviation ministry officials have not shown any interest from SpiceJet yet.