Friday, June 30, 2017

Anand Mahindra says he is not brave enough to buy Air India, here is why

Air India’s reign over the skies ended years ago.  A premier Indian airline in its heyday, the Government-owned carrier is now burdened with debt and losses and had to be bailed out in the past with taxpayers money. It is no surprise that the Cabinet has finally given the nod for divesting the Government’s stake in the national carrier.
Taking over ailing companies and turning them around is sometimes profitable, but Anand Mahindra doesn’t appear to share the view, at least when it comes to Air India. When asked on Twitter whether he would invest in the debt-ridden Air India, Mahindra replied saying: “I see myself as a generally courageous person…But I confess..I don’t possess THAT much courage…”
Mahindra’s success journey is marked with risks and taking on industry leaders. Mahindra, who was initially invested in manufacturing tractors and heavy vehicles, diversified his business interests and challenged the monopoly enjoyed by Tata in many sectors. He created an aviation ecosystem where his company now makes small aircraft and is in the process of launching flight operations to boost the country’s regional connectivity.
So, the company has the pedigree, the experience, the money and the right mixture of leadership. Then why is Mahindra so wary about investing in Air India?
Back in the day, Air India was called the Maharaja of the Skies. But the Maharaja is now unable to support himself without his privy purse. The biggest challenge facing the government is deciding whether to write off Air India’s Rs 50,000 crore debt or restructuring it. It government had already sanctioned a Rs 30,000 crore bailout package for the airline, most of which had already been released. Still, the financial situation of the airline didn’t seem to improve much. Two years ago, the airline posted an operational profit for the first time after around a decade. The profit was projected to rise in coming years. However, the overheads negated the positive growth and under reporting of losses observed in a CAG report raised questions on the financial management of the carrier.
29/06/17 Kanishka Singh/Indian Express