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The Potential Buyers For India’s National Carrier That Is Up For Sale – Air India


03/29/2018


The Potential Buyers For India’s National Carrier That Is Up For Sale – Air India
A controlling stake in the loss making national carrier of India- Air India had earlier been announced to be sold off by the Indian government.
 
This sale – which would see about 76 per cent of the stake in the airline being put up for sale, would be amongst the most high-profile asset sales in India in the last 10-12 years.
 
The new purchaser of Air India would also have to take the burden of about $5bn (£3.6bn) of debt of the carrier as the airlines has been kept operational with taxpayer’s money of the country.
 
The image of Indian prime minister Narendra Modi as a reformist leader would get boosted if the privatization attempt is successful.
 
However, there are multiple barriers to the deal.
 
Threats of wide ranging protests have bene issued by trade unions in case the deal is pushed through and such attempts of deals have bene put called off on earlier occasions.
 
Poor service and cancelled flights have resulted in the national carrier – once the only airline of India, to lose reputation and market share to new entrants in the industry.
 
However, the prospect of buying Air India could be attempting prospect for many investors given the average annual growth rate of 20 per cent in the Indian aviation industry, even though the airline had never returned to profit ever since the last time in 2007. Additionally. the Indian market has been identified to be grossly underserved.
 
The company would be put up for sale under four different entities according to information made public by the Indian government. Up for sale is 76 per cent of the main airline business which is comprises of Air India, the low-cost arm Air India Express and one of its subsidiaries AISATS. Also up for sale are Alliance Air - the carrier's regional arm, Air India Air Transport Services and Air India Engineering Services Ltd.
 
Interested buyers can show interests in one or all of the four entities.
 
The airline has slots in some of the most important international airports such as London Heathrow and New York JFK which makes the international routes owned by the airline the most lucrative section of the business of the company.
 
Interest in Air India's international passenger airline operations has bene expressed by IndiGo, India's largest airline, which will boost the international network of IndiGo which now has seven routes.
 
Indigo said it would also "evaluate" the option of taking on all of the airline business and see if it was "economically feasible for us to go down that path".
 
"At the end of the day, this exercise is not about becoming bigger for the sake of being bigger - it is all about profitable growth," co-founder Rahul Bhatia said.
 
However, all of Air India's businesses and subsidiaries is not being sought to be bought by IndiGo, he made clear.
 
"In our view, that would be a herculean task which would at best be a very challenging proposition and at worst an impossible task, unless an organisation is willing to fund large losses for a very long time," Mr Bhatia said.
 
The joint venture airline set up by India's Tata Group and Singapore Airlines – Vistara, is another company that has shown interest in the offer.
 
It was "open" to an Air India bid., said Singapore Airlines general manager David Lime earlier this month.
 
"We haven't closed the doors and when that happens we will look at it", he said
 
It was also being rumored that Qatar Airways could be another international airline interested in buying a stake in Air India, but those rumors have been denied by the middle eastern airliner.
 
(Source:www.bbc.com)


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