As reported Wednesday, the Indian government is once again looking to privatize struggling national carrier, Air India. The renewed interest in privatization comes after news of a forthcoming committee report by Cabinet Secretary P. K. Sinha. Here, we look at the political, economic, and market factors involved in Air India’s latest privatization bid.
On the other hand, any bid for the airline, at the time, would have included upwards of US$5bn of debt. Not to mention, the government would have retained a 24% stake, and the carrier had to keep its 27,000 strong labor force.
For many would-be investors, the 2017-18 proposal was fundamentally unattractive. Only once the Cabinet Secretary’s report is published later this month, however, will the details of the 2019 privatization proposals be known.
While the details of the upcoming privatization plan are unknown, changes in market dynamics will certainly influence investor appetite for the national airline.
Unfortunately for the national carrier, recent developments have not always been stellar. Back in December 2018, the airline was injected with $300m of public funds intended for the maintenance of aircraft purchases and loans.
The $300m transfer, and $72m spent on maintenance for grounded jets only added to the airline’s precarious financial position. Indeed, the airline is said to hold a total debt burden of more than US$8bn, according to an Economic Times article published last June.
22/08/19 Thomas Jérémie Hayden-Lefebvre/Simple Flying
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On the other hand, any bid for the airline, at the time, would have included upwards of US$5bn of debt. Not to mention, the government would have retained a 24% stake, and the carrier had to keep its 27,000 strong labor force.
For many would-be investors, the 2017-18 proposal was fundamentally unattractive. Only once the Cabinet Secretary’s report is published later this month, however, will the details of the 2019 privatization proposals be known.
While the details of the upcoming privatization plan are unknown, changes in market dynamics will certainly influence investor appetite for the national airline.
Unfortunately for the national carrier, recent developments have not always been stellar. Back in December 2018, the airline was injected with $300m of public funds intended for the maintenance of aircraft purchases and loans.
The $300m transfer, and $72m spent on maintenance for grounded jets only added to the airline’s precarious financial position. Indeed, the airline is said to hold a total debt burden of more than US$8bn, according to an Economic Times article published last June.
22/08/19 Thomas Jérémie Hayden-Lefebvre/Simple Flying
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