Monday, September 07, 2020

Why COVID-19 gives potential Air India buyers bargaining chip

Gradual opening of the skies helped flag carrier Air India cut monthly losses but April-June quarter losses swelled to Rs 2,500 crore as the pandemic continued to take a heavy toll on the aviation sector.

"The net loss before tax was about Rs 2,500 crore in the first quarter of the current financial year," an official source said. While mounting losses put additional burden on the government, the prevailing situation offers prospective buyers more bargaining power.

Tata Group is being seen as the front-runner for the disinvestment-bound airline. The last date for submitting initial bids for Air India has been extended to October 30, fourth since the request for qualification (RFQ) was issued in January.

"The current situation offers much more bargaining power to the prospective buyers. I think Tatas would be the most serious buyer given their interest in aviation and also their awareness that there is long-term high potential of Indian aviation," said Rajan Mehra, ClubOne Air CEO and former India head of Qatar Airways.

Ankur Bhatia, Executive Director of travel and hospitality major Bird Group also feels that prospective bidders have chances of getting a better deal in the current business environment, and also with the government being hell-bent to sell the national carrier.
According to official sources, Air India had total revenue of about Rs 1,600 crore while total expenses stood at Rs 4,130 crore. An Air India spokesperson declined to confirm the financial numbers. "We would not like to comment on such internal issues," the spokesperson said in an email response.
07/09/20 Nirbhay Kumar/Business Today

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