Friday, July 14, 2017

Air India’s Salvador Dali ashtrays and surreal debt cloud sale push

New Delhi: Indian Prime Minister Narendra Modi’s cabinet has signed off on a plan to sell all or part of Air India Ltd, a debt-ridden, state-run carrier with the most unusual baggage.
The airline’s balance sheet includes commercial space near London Heathrow, land in Tokyo, Hong Kong and Nairobi, all bought during the heydays when the airline commissioned paintings by Indian modern artists and hired surrealist painter Salvador Dali in the 1960s to design ashtrays.
Then there’s about $8bn in debt, a money-losing airline operation, five subsidiary companies and a joint venture, a combined workforce of 27,000 and unions with a history of grounding the airline over work demands.
Not surprisingly, selling even a minority stake in the loss-making, 85-year-old company isn’t going to be a cakewalk. At least one attempt almost two decades ago failed amid fierce political opposition. Modi’s government has yet to decide how the sale will take place, how much of the airline is for sale and, more importantly, what to do with the airline’s accumulated debt.
Undercut by budget carriers like IndiGo and SpiceJet Ltd, Air India’s local market share has shrunk to about 13% from 35% just a decade ago.
“To find someone who will buy Air India in full, with all its assets, subsidiaries and artifacts, and who will also take on the accumulated debt, is going to be very difficult,” said Kanu Gohain, a former chief of India’s Directorate General of Civil Aviation. “Taxpayer money has been going to this organisation to feed inefficiency and incompetency. That’s the biggest liability.”
14/03/17 Bloomberg/Gulf Times