As the Air India sale continues, Indian Civil Aviation minister has made the options clear: either privatisation or shutdown.
Choice between disinvestment or closing down
Civil Aviation minister Hardeep Singh Puri yesterday announced that Air India will be completely disinvested and added that the choice is only between disinvestment or closing down the airline company. He said:
We’ve decided that Air India will be 100% disinvested. Choice isn’t between disinvestment and non-disinvestment, it’s between disinvestment and closing down. Air India is a first-rate asset but has an accumulated debt of Rs 60,000 Crore. We need to draw the slate clean.
Currently, Air India’s daily cash burn stands at ₹20 crores ($2.76 million). While this is lower than many other major carriers, it comes even as Air India is now making money, according to Mr. Puri. This means the debt has made the airline unsustainable to fly even while it is making money. So when will we see the carrier to go private hands?
The minister on Friday said that the government is looking at a new timeline for Air India disinvestment and financial bids will be invited in the coming days.
The short listed bidders for Air India are now down to two: Tata Group or SpiceJet MD Ajay Singh. The two bidders will now have roughly two months (64 days) to analyze internal data and place their financial offers for Air India.
Mr. Puri said that the entire disinvestment process is likely to be completed by May or June. This is certainly an optimistic timeline considering the delays seen in the past, but Mr. Puri has made it clear that the government does not want to hold on to Air India for much longer. Mr. Puri said:
In the last meeting, on Monday, it was decided that the shortlisted bidders (for Air India disinvestment) be informed that the bids have to come in within 64 days…This time the Govt is determined and there is no hesitation.
The coming month will tell us more about if the government can stick to this timeline. For now, both Tata Group and Ajay Singh are likely poring over Air India’s internal data to plan their final bids.
“I don’t have the capacity to keep going to Nirmala ji (India’s financial minister) and say please give me some money,” he said in an apparent reference to seeking funds to run Air India from the finance minister. Explaining why this privatization would be different from previous ones, Mr. Puri said that the government is determined to sell the airline and other attempts had been half-hearted.
Featured image by Airbus
What do you think about this decision and the future of Air India? Do you feel it is the right decision? Let me know in the comments section below.