Monday, March 13, 2017

Can a Middle-Eastern suitor fly in for Air India?

New Delhi: With the buzz on the privatisation of state-owned airline Air India (AI) erupting again, aviation experts say it was the right time for such a move but wondered whether investors' would have the appetite for it or whether politically and strategically it would be the right overture.

Even as presentation for divestment of government stake in the airline was reportedly being made to the Prime Minister's Office (PMO) and the finance ministry, telecom experts believe a staggering debt of around Rs64,000 crore –as per the latest financial numbers released in 2014-15 – there would not be many takers for the national carrier except for the deep-pocketed Gulf carriers such as Emirates, Etihad and Qatar Airways.

Pankaj Pandit, who is an ex-Air India employee and now works as an airline consultant, said, "The appetite for buying Air India, according to my analysis, will come only from this middle-eastern airlines such as Emirates, Etihad and Qatar Airways because they are the ones with deep pockets. If you look at takeovers in recent past, they (Gulf carriers) have been buying airlines in Europe and Australia. Qatar, in particular, may look at AI as it wants to catch up with Emirates; for which it will have to grow inorganically. European carriers may not be interested in buying an Asian airline".
According to him, the timing for it would right as AI's operations had finally become cash positive after a long time and the overall aviation sector was doing well because of softer fuel prices and healthy air passenger traffic growth.
For instance, in fiscal 2016, the airline reported an operational profit of Rs 105 crore after a long time while its losses were down to Rs3,587 crore from Rs5,859 crore in the previous year.
13/03/17 Praveena Sharma/DNA