Wednesday, September 30, 2020

Four Reasons Why Air India May Get Buyers After 17-Year Wait

 India's national carrier Air India is in severe financial crisis, prompting the government to seek bidders to buy a 100 percent stake in the 121-strong fleet. The full-service carrier is $8.3 billion in debt. Despite the bidding deadline being extended for the fourth time this year, experts point out why it may attract bidders this time.

Founded by well-known Indian industrialist JRD Tata in 1932, and later taken over by the Indian government, Air India was a cause for pride and joy for the country. Since then, the carrier has gone from glory to financial burden on the exchequer.

"The government has decided to disinvest Air India due to its fragile finances and its continued and accumulated losses. Further financial support to revive the airline in a mature and competitive aviation market would not be the best use of scarce financial resources of the government", Hardeep Singh Puri, Minister of Civil Aviation said on 17 September in parliament.

With 30 October set as a new deadline for bidders to buy a full stake in the airline - India's Tata Group showed interest in bidding - anticipation is running high over whether the attempt will be successful this time.

Sputnik has contacted observers to name the main reasons that will likely stimulate bids to purchase the carrier this time.

1. Revenue From Massive Repatriation Mission Amid Pandemic

Air India has been at the helm of carrying out repatriation flights in the country in the wake of the coronavirus pandemic. Vande Bharat - the largest and phased evacuation mission - kicked off on 6 May and is currently underway. Civil Aviation Minister Hardeep Singh Puri recently announced that the carrier had generated over $350 million from these flights.

Abhilash Varkey Abraham, Research Analyst, Aerospace, Defence & Security Practice, Frost & Sullivan, tells Sputnik that due to severe travel restrictions, the focus has pivoted to generate revenue from cargo and repatriation flights.

"For Air India and Air India Express who were solely responsible for repatriation flights, this will offset a small percentage of their overall revenue lost", he said.

30/09/20 Pratibha Sharma/Sputnik

To Read the News in full at Source, Click the Headline


Post a Comment