Is IndiGo's exit a reflection of the industry sentiment towards the Air India divestment? Yes, says a senior executive from an international airline.
"The pullout was not surprising, it's sensible," he told Moneycontrol. The airline he works for, despite being one of the biggest names in global aviation, didn't consider participating in the divestment of India's national flyer.
At the same time, others have called it a "wheat separated from the chaff moment" in the Air India divestment process.
"Many have been scavenging for bits and pieces. But the government has been clear that it wants to sell Air India to someone who will make something out of the national airline as a whole," says Mark Martin, Founder & CEO of Martin Consulting LLC, an aviation advisory and consulting firm.
IndiGo, in an announcement on Thursday night, said it has opted out of the race for Air India.
“From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express," said Aditya Ghosh, President and Whole Time Director.
"However, that option is not available under the government’s current divestiture plans for Air India. Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations,” he added.
The country's largest airline by domestic share was hoping that the government demerges the domestic operations of Air India, enabling IndiGo to bid for just the international business of the national airline.
But the Government has decided to sell Air India, Air India Express and the ground handling unit, AISATS, together.
While the exit of IndiGo, the only domestic airline that was financially capable to take over Air India, will dampen spirits in the Government, the market is expected to give a more cheerful response.
"Interest (in Air India) has been minimal till now. The huge debt on the books is a big damper," said the senior official quoted above. "IndiGo's pullout is not surprising, it's a sensible decision," he added.
The preliminary information memorandum (PIM) released by the Ministry of Civil Aviation on March 28, noted that Air India's buyer will have to take on debts of Rs 33,392 crore. Many in the industry considered the amount higher than expected.
But if any domestic airline was capable to take on the debt, it was IndiGo. Reports had even emerged saying the airline could team up with Qatar Airways to team for the Air India bid.
IndiGo has a market capitalisation of Rs 54,943 crore and is the most profitable flyer in the industry. It's net profits in the December quarter soared by 56 percent to Rs 762 crore.
06/04/18 Prince Mathews Thomas/moneycontrol
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"The pullout was not surprising, it's sensible," he told Moneycontrol. The airline he works for, despite being one of the biggest names in global aviation, didn't consider participating in the divestment of India's national flyer.
At the same time, others have called it a "wheat separated from the chaff moment" in the Air India divestment process.
"Many have been scavenging for bits and pieces. But the government has been clear that it wants to sell Air India to someone who will make something out of the national airline as a whole," says Mark Martin, Founder & CEO of Martin Consulting LLC, an aviation advisory and consulting firm.
IndiGo, in an announcement on Thursday night, said it has opted out of the race for Air India.
“From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express," said Aditya Ghosh, President and Whole Time Director.
"However, that option is not available under the government’s current divestiture plans for Air India. Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations,” he added.
The country's largest airline by domestic share was hoping that the government demerges the domestic operations of Air India, enabling IndiGo to bid for just the international business of the national airline.
But the Government has decided to sell Air India, Air India Express and the ground handling unit, AISATS, together.
While the exit of IndiGo, the only domestic airline that was financially capable to take over Air India, will dampen spirits in the Government, the market is expected to give a more cheerful response.
"Interest (in Air India) has been minimal till now. The huge debt on the books is a big damper," said the senior official quoted above. "IndiGo's pullout is not surprising, it's a sensible decision," he added.
The preliminary information memorandum (PIM) released by the Ministry of Civil Aviation on March 28, noted that Air India's buyer will have to take on debts of Rs 33,392 crore. Many in the industry considered the amount higher than expected.
But if any domestic airline was capable to take on the debt, it was IndiGo. Reports had even emerged saying the airline could team up with Qatar Airways to team for the Air India bid.
IndiGo has a market capitalisation of Rs 54,943 crore and is the most profitable flyer in the industry. It's net profits in the December quarter soared by 56 percent to Rs 762 crore.
06/04/18 Prince Mathews Thomas/moneycontrol
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