The euphoria over FDI in airline has the potential of turning into a damp squib. A Bloomberg report quoted Tim Clark, President, Dubai-based Emirates, as saying that the airline wouldn’t invest in Indian carriers unless the government there gave ultimate control to outside investors.
Clark has hit the nail when he says that removal of a ban on foreign stakes will not, in itself, be enough to persuade Emirates to bid, given the limited influence on offer versus the poor financial records of Indian airlines and the prices likely to be demanded. What is true for Emirates is also true for other airline companies looking to invest in India.
Business Standard had, in an earlier article on SpiceJet, argued that Indian companies would be asking for a very high premium for a stake in their businesses, but would not be willing to part with control.
Clark points out that “If we put money into an Indian carrier and then said we wanted to take down the labor force by 50% would they let us do it? No. If we wanted to drop airports that were uneconomic, would they let us? Probably not.”
What Clark is highlighting is that Indian companies only want foreign airlines’ money and not their advice. They would like to continue operating in their old way, draining shareholders money in the process.
25/04/12 Business Standard
To Read the News in full at Source, Click the Headline
0 comments:
Post a Comment