Potential Buyers Are Weighing Up The AI Opportunity

With the government finally biting the bullet, potential buyers are weighing up the Air India opportunity.

- Manu Kaushik

After much dilly-dallying and half-hearted attempts to revive the fortunes of Air India, the government has decided to off load the airline. The fact that Air India’s revival is beyond the wherewithal of the government became evident when Finance Minister Arun Jaitley talked about the need for Air India’s divestiture in a television interview. Since then, things have moved fast. Jaitley’s comments were followed by the cabinet’s in principle approval for the stake sale in late June. A group of ministers will delve into the finer details of privatisation, including the amount of stake to be sold, treatment of debt and its subsidiaries, and how to manage public interests.

Initially, it seemed that the government may face difficulties. It was believed that AI’S massive debt (₹46,570 crore), accumulated losses (₹47,440 crore between 2007/08 and 2015/16), and privatisation-averse employee unions could deter potential buyers. But that’s not the case.

According to reports, several entities have informally shown interest in buying the beleaguered airline. Low-cost carrier IndiGo has sent a formal letter to the civil aviation ministry expressing interest in buying the international operations of the airline. In fact, the lure of international operations is so big for IndiGo, that it could acquire the entire airline if the government sells the whole nine yards.