AIR INDIA: TO BUY OR NOT TO BUY

In its second attempt to sell the loss-making national carrier, the government has sweetened the deal for potential buyers. But are the concessions enough for take-off?

- Anshul Dhamija

FULL CIRCLES ALWAYS make for great narratives. For instance, the conjecture that the Tata group has evinced interest in purchasing Air India, which was started by its founder, JRD Tata, in 1932, as Tata Airlines. But the coming-home to-Tata story is still in the realm of speculation, as the government awaits more suitors in its renewed effort to sell the national carrier.

After it made its first attempt in 2018, in January this year the government invited bids for a 100% stake sale in the loss-making Air India. This includes Air India’s 100% ownership of Air India Express Limited, a profitable international low-cost airline, and 50% ownership of Air India SATS Airport Services Private Limited, which provides ground handling and cargo handling services at airports situated in New Delhi, Hyderabad, Bengaluru, Thiruvananthapuram, and Mangaluru.

This time around the government has sweetened the deal for buyers by absorbing almost two-thirds of the airline’s debt of ₹62,000 crore. This means, potential suitors will inherit a debt of about ₹23,286 crore (about $3.2 billion), which was accrued against the purchase of operational aircraft.

“I’m optimistic about the sale. The government has learnt lessons from the past. They have realized that there is no future for Air India if it continues under government ownership,” says Jitender Bhargava, former executive director of Air India. “The concessions that potential acquirers have been looking for have been provided.”