New Delhi: The Centre for Asia Pacific Aviation (CAPA) has asked the government to ease a few terms and conditions in the Expression of Interest for divestment of Air India.
“It is critical that terms in the Expression of Interest, particularly for labour and debt, are amended, as the successful bidder will need to invest in restructuring and absorbing losses for several years in addition to the consideration to be paid for acquiring a 76 per cent stake,” CAPA said in a statement.
CAPA added that unless the bidders are confident that they will be ring-fenced from possible political risks, this could prove to be a key reason for possible non-participation by some parties at the Request for Proposal Stage.
CAPA estimates that Air India is headed for two-year loss of $1.5-2.0 billion in FY19 and FY20. “Failure to divest could see the airline close unless the government is willing to spend taxpayer’s funds. It will be far less costly to make the offer more attractive to investors,” CAPA argued.
But sources in the industry have questioned CAPA for raising the issue all over again.
On the issue of Air India’s employees, sources pointed out that if one is to compare employees’ cost and strength then it is at par with the best in the industry.
04/05/28 Business Line
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“It is critical that terms in the Expression of Interest, particularly for labour and debt, are amended, as the successful bidder will need to invest in restructuring and absorbing losses for several years in addition to the consideration to be paid for acquiring a 76 per cent stake,” CAPA said in a statement.
CAPA added that unless the bidders are confident that they will be ring-fenced from possible political risks, this could prove to be a key reason for possible non-participation by some parties at the Request for Proposal Stage.
CAPA estimates that Air India is headed for two-year loss of $1.5-2.0 billion in FY19 and FY20. “Failure to divest could see the airline close unless the government is willing to spend taxpayer’s funds. It will be far less costly to make the offer more attractive to investors,” CAPA argued.
But sources in the industry have questioned CAPA for raising the issue all over again.
On the issue of Air India’s employees, sources pointed out that if one is to compare employees’ cost and strength then it is at par with the best in the industry.
04/05/28 Business Line
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