Within two weeks of releasing an expression of interest for Air India, the most likely suitors for buying the sinking airline have already begun backing off.
Other suitors, mostly from overseas, may come but will most likely turn back because of the fracas the privatisation process is turning into.
To recap, the deal is as follows: The government wants to sell 76 percent in Air India, along with 100 percent in low-cost international carrier Air India Express and 50 percent in Air India SATS Airport Services, a joint venture. It does not want to sell individual operations of the company.
Domestic airlines IndiGo, Jet Airways and the Tata Group have all begged off the deal. And SpiceJet’s Ajay Singh said his airline is too small to bid for Air India.
There could be many reasons the potential suitors are shying away. Foremost is financial.
Air-India is sitting on debt of Rs 48,447 crore and accumulated losses of Rs 46,256 crore.
But the government wants potential buyers to absorb two-thirds of the debt. This might change but whichever way a deal is structured, it cannot be wished away. And any haircut will lead to howls of protest.
Which in some ways is now the larger issue.
The headwinds on this deal are increasing on a near-daily basis. Many of the 18,000 employees have quite predictably begun protesting the privatisation. Reports say the airline’s 11 (yes 11) unions have begun to stir and are now even using social media to air their opposition.
The politicians (Congress and Trinamool) have jumped into the fray as well.
Some of them are asking if we would be okay with a British Airways (of the British Empire) running an Air India today and what that would mean to those who fought for freedom against the British.
17/04/18 Govindraj Ethiraj/Bloomberg
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Other suitors, mostly from overseas, may come but will most likely turn back because of the fracas the privatisation process is turning into.
To recap, the deal is as follows: The government wants to sell 76 percent in Air India, along with 100 percent in low-cost international carrier Air India Express and 50 percent in Air India SATS Airport Services, a joint venture. It does not want to sell individual operations of the company.
Domestic airlines IndiGo, Jet Airways and the Tata Group have all begged off the deal. And SpiceJet’s Ajay Singh said his airline is too small to bid for Air India.
There could be many reasons the potential suitors are shying away. Foremost is financial.
Air-India is sitting on debt of Rs 48,447 crore and accumulated losses of Rs 46,256 crore.
But the government wants potential buyers to absorb two-thirds of the debt. This might change but whichever way a deal is structured, it cannot be wished away. And any haircut will lead to howls of protest.
Which in some ways is now the larger issue.
The headwinds on this deal are increasing on a near-daily basis. Many of the 18,000 employees have quite predictably begun protesting the privatisation. Reports say the airline’s 11 (yes 11) unions have begun to stir and are now even using social media to air their opposition.
The politicians (Congress and Trinamool) have jumped into the fray as well.
Some of them are asking if we would be okay with a British Airways (of the British Empire) running an Air India today and what that would mean to those who fought for freedom against the British.
17/04/18 Govindraj Ethiraj/Bloomberg
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