Friday, June 04, 2021

Govt must consider Air India's massive financial burden: CAPA India

Mumbai: The government must consider Air India's massive financial burden, which is likely to be a potential liability of USD 20 billion before a business turnaround, during the disinvestment process and look at possible changes to the contours of the proposed sale, according to a report.

Leading consultancy CAPA India on Thursday also emphasised that the government should have a 'Plan B' for the national carrier in place now, which can be immediately operationalised, if required, in face of the prevailing situation.

The coronavirus pandemic has significantly impacted the aviation industry worldwide, including India.

Domestic carriers are now grappling with lower demand and rising costs, amid the second COVID wave.

CAPA India said that shuttering Air India would not only be extremely challenging politically but will have a notable impact on the market, especially in the international segment.

The second COVID wave has increased aviation industry challenges significantly and, as a result, may potentially increase the liabilities of Air India to around an estimated USD 20 billion by FY2025, it added.

As the government remains committed to the privatisation of the flag carrier, showing strategic resolve to conclude the transaction as a priority, the report said the intention to exit Air India is the right strategy and must be pursued aggressively.

Taking into account estimated losses in FY2021 and FY2022, Air India's liabilities will amount to over USD 16 billion, the report said.

04/06/21 PTI/Business Standard

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