Air India needs a sell-off plan; make it fast

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Updated: February 17, 2017 11:39:39 AM

Air India is barely flying. Ironical as it may sound, it has managed to just afloat on the back of a massive Rs 30,000 crore bailout package from the central government.

Air India has been hit severely by a Rs 46,570 crore debt including aircraft related loans of about Rs 15,900 crore. (PTI)Air India has been hit severely by a Rs 46,570 crore debt including aircraft related loans of about Rs 15,900 crore. (PTI)

Air India is barely flying. Ironical as it may sound, it has managed to just afloat on the back of a massive Rs 30,000 crore bailout package from the central government. As reported earlier, Air India has been hit severely by a Rs 46,570 crore debt including aircraft related loans of about Rs 15,900 crore. Earlier, the Economic Survey 2017 had also spoken about the mess AI was in and had given indications to privatise the airline. Now, while it has been opposed in the parliament on earlier occasions, it must be remembered that the bailout packages the government has been providing have gone in vain. In the year 2013, Jet Airliner Crash Data Evaluation Centre (JACDEC) had said that AI was placed third last in a list of 60 airlines which it evaluated. This is a big blow to the national carrier and its global image. So instead of humiliating the industry any further and wasting the tax payer’s money on something that has clearly been futile, the government could sell it to corporates that can make maximum use of the government schemes and policies while taking the airlines on a better path.

Earlier, speaking to CNN, Aviation Minister Ashok Gajapathi Raju had said that the government wanted AI to survive. He had said that they did not mind where it was, who owned it as long as it served the Indian people and skies. Raju had further added that he couldn’t waste the taxpayers’ money to keep it flying for eternity. Whether it was owned by the government or somebody else, the government would like it to survive.

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According to reports, the government could put the Air India Ltd on listing after getting a consortium of banks to be the strategic investors of the company. However, the listing of the company is considered to be a major risk considering the sheer amount of its massive debts. The government’s plan of listing the airline and finding a private investor would be heavily dependant on how much the airlines can clear up its debts. For this, according to the government has to continue its efforts to turn the working capital debt owed by AI to the consortium of banks, asking them to convert the debt into equity. Although, experts suggest that Air India’s massive debts would negate the value of equity. Hence, the government needs a sell-off plan and a better plan than it has in place at the moment. There is no need to keep spending the taxpayers’ money on a bleeding beast that would only drag it down. Instead, have a plan to hand it over to some entity that has the capability and the resources to pull it out of the abyss.

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