NEW DELHI: The transaction adviser for Air India’s divestment has suggested four options to the government regarding the struggling airline’s future that range from shutting it down to further reducing the debt of over Rs 23,000 crore that bidders need to take on and letting them choose a level they find viable.
It is reliably learnt that the four options suggested by the adviser, Ernst & Young India, to the inter-ministerial group are: 1) Keeping the debt level at Rs 23,286 crore or reducing it further while changing the timelines; 2) Assigning no pre-fixed debt level and letting bidders quote a combined debt and equity value; 3) Government continuing to run AI for 2-3 years; 4) Winding up AI.
The options come in the wake of the pandemic-induced sharp downturn in the airline business globally.
Govt hopes AI will find bidder as demand for long-haul grows
Aviation minister H S Puri had recently reiterated in Parliament that the choice “is between privatising or closing down” Air India. Based on the suggestions, the core group of secretaries and the ministerial panel handling the sale of the cashguzzling national carrier will decide the future course of action although it is unclear if the government will be able to decide on the much-delayed privatisation during the current fiscal year.
The pandemic has left all global airlines — including those seen as potential bidders for AI — struggling to survive. The fortunes of Indian corporates, including likely bidders, have also taken a sharp downturn and whether they have the appetite for taking on AI remains to be seen. AI has a combined debt-cum-liabilities burden of almost Rs 90,000 crore.
At the same time, the Covid-19 pandemic is expected to fuel demand for nonstop long to medium haul travel. To cut down on touch points, people will now be wary of taking connecting flights from the Gulf or Southeast Asia, and will prefer to fly nonstop between India and North America, Europe, Australia and Africa.
Due to this reason, the aviation ministry brass has been hopeful that AI will find a bidder this time.