Air India has reported a loss of Rs 8,640 crore for the 2018-19 financial year. This, despite a domestic market share of 12.9 percent and an international market share of 68 percent. The balance sheet continues to be extremely weak with Rs 29,000 crore of debt (the debt has been halved, from the previous 58,000 crores, thanks to the creation of a special purpose vehicle).
While the government has signalled clear intent of divesting its stake in the airline, owing to the adverse economic climate, sharp global slowdown and severe liquidity crunch, the divestment is likely to be challenging. Until that time, the airline has to stay aloft.
Can it? There are no easy answers there.
But there are plenty of answers to why a once-proud carrier today stands crippled. And an analysis of how the state of affairs came to be — due to a confluence of factors — offers valuable insights for business and government.
Because of the ownership and accountability structure, in spite of key assets and advantages, the stakeholders at Air India have not been aligned towards a single outcome. Over the years, as the airline bled cash, the demands for additional equity infusions and for writing off the debt increased.
17/09/19 Satyendra Pandey/CNBC TV18
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While the government has signalled clear intent of divesting its stake in the airline, owing to the adverse economic climate, sharp global slowdown and severe liquidity crunch, the divestment is likely to be challenging. Until that time, the airline has to stay aloft.
Can it? There are no easy answers there.
But there are plenty of answers to why a once-proud carrier today stands crippled. And an analysis of how the state of affairs came to be — due to a confluence of factors — offers valuable insights for business and government.
Because of the ownership and accountability structure, in spite of key assets and advantages, the stakeholders at Air India have not been aligned towards a single outcome. Over the years, as the airline bled cash, the demands for additional equity infusions and for writing off the debt increased.
17/09/19 Satyendra Pandey/CNBC TV18
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