Air India sale grounded
mumbai — The Indian government’s attempt to sell debt-laden national carrier Air India is in danger of hitting the skids as a key deadline looms with no bidder in sight.
Prime Minister Narendra Modi’s administration announced in March that it would privatise the beleaguered airline.
But the plan has struggled to get off the ground with several prospective buyers ruling themselves out.
“Conditions put forth by the government with regards to debt and employee costs are restrictive and have put off investors,” aviation expert Amrit Pandurangi told AFP.
“The government needs to address the concerns of the private investors if the stake sale is to move forward,” the independent analyst added.
Air India, founded in 1932, was once the country’s monopoly airline, known affectionately as the “Maharaja of the skies”.
But it has been haemorrhaging money for years as it has slowly lost market share to low-cost private players in one of the world’s fastest-growing airline markets.
Successive governments pumped in billions of dollars to keep it afloat before Modi’s cabinet last year gave the go-ahead to start the process of selling the flagship carrier.
The government wants to sell a 76 per cent stake in the 86-year-old airline and offload $5.1 billion of its debt in what would be one of India’s biggest ever divestments.
However the proposal has failed to fly with several major airlines, including IndiGo, now India’s No.1 airline, and Jet Airways, which said last month they were out of the running after reviewing government bid documents.
Analysts say the company’s large debts and generous pension schemes are putting off buyers.
Air India is about $8 billion in the red and reported losses of almost ₹58 billion ($866 million) for the financial year ending March 2017.
“We don’t think any of the Indian airlines have the financial strength to bid for Air India,” said Binit Somaia, South Asia director at the Centre for Aviation, told AFP.
Airlines are also being deterred by the sale terms, experts say.
The documents state that the buyer has to purchase all of Air India’s six entities, three of which are loss-making. —