A seemingly never-ending story!
After quite a few failed attempts to sell off Air India, The country’s government body is now said to have put the carrier back on the “for sale” list. This move apparently follows
on Indian cabinet ministers having given their approval to put Air India and its subsidiary companies up for sale (again)!
Hard to believe what’s fact or fiction these days with Air India. In our 29. June issue of CargoForwarder Global we reported based on information received that the Indian government had put the sale process on hold due to high oil prices and volatile currency movements.
Well - oil won’t get cheaper in the near future - so, who’s in control as far as Air India is concerned.
Never ending story
The once proud Indian operator has been bandied around as a sale item for the past couple of years. There were quite a few companies, including airlines such as Singapore Airlines, who’d previously shown their interest in taking all or part of the carrier. Most were scared off by the almost unacceptable terms laid down by the Indian government. It was then in March 2018 that the government did a turn-around and in their wisdom decided that the sales process should be terminated altogether. Since then, Air India’s employees having been living in a limbo, not knowing whether they’ll go backwards or forwards in the future.
In a report published at the end of June by India’s Press Information Bureau, it was stated that Prime Minister Narendra Modi’s close advisors had now again given the green light for a “strategic disinvestment” of Air India along with its five subsidiary companies. This decision followed on the apparent recommendation of the Air India Specific Alternative Mechanism (AISAM) committee.
Who will sell what?
There however seems to be some disagreement between what AISAM officials are saying and the views of those sitting in the Indian Ministry of Civil Aviation (MOCA).
The MOCA gentlemen are not in agreement with AISAM’s claims that Air India’s losses for the 2018/2019 period are expected to reach a staggering USD 1.107 billion (INR76.35 billion). Reports state that the 2017/2018 loss amounted to almost USD 776 million (INR53,48 billion).
If the above figures were to be proven as being correct, then the government would face an even larger problem than experienced with the previous sales effort whereby many interested investors backed off due to Air India’s enormous debt picture of which they (investors) were expected to carry up to almost USD 5 billion if a sale were agreed.
Maybe Air India has now become a more interesting investment for some as Jet Airways, their largest long-haul competitor, is finally going into bankruptcy. Providing other foreign carriers don’t jump in first, Air India could benefit by getting a larger portion of the international routes into and out of India. To do this they would have to claim many of the slots now being freed up by the Jet Airways demise.
This could then bring more much needed revenue and support the MOCA claim that losses won’t be as high as their colleagues at AISAM say they will be.
New bond sale being prepared
At the beginning of this month it was made known by the Air India Assets Holding that the carrier aims to raise just over USD 3 billion in a bond sale which is hoped would go some way to refinancing some of their huge debt.
Bloomberg reported that Air India is lobbying support for bids from various banks and that almost two-thirds of the amount (USD 2.12 billion) would be raised by means of so called “sovereign guarantees.”
India’s Economic Times reports that the airline will only be able to pay employees until October and that USD 4.3 billion of the total Air India debt of USD 8.4 billion, was transferred to a special-purpose vehicle with the aim of making it easier to put a sale into motion.
Air India, which still operates a fleet of almost 130 aircraft is not an easy takeover candidate and it remains to be seen as to whether any of the previous takeover aspirants will come back on the scene or not.
John Mc Donagh
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