Air India sale: Last call for deboarding

The government has moved one final time to honourably exit from the aviation business by offering its entire stake in debt-ridden Air India and two of its subsidiaries, Air India Express Ltd and ground-handling arm, AISATS. The intent and move are bold and reform-oriented. But will the government find a buyer even after it takes charge of Rs 40,000 crore liabilities? Several aborted attempts in the past to divest stakes in AI have actually led to cynicism among the bidders that the government will ever give it up lock, stock and barrel. India’s flagship carrier is a huge asset and business which is suffering only due to gross mismanagement. That’s the reason it has had huge losses in a sector that has been seeing double-digit growth annually. Bidders will be aware of this reality. Reports suggest that Vistara, owned by Tatas, may like to chip in and turn the company around. At what price and on what terms is the question.

To get their hands on a whopping 146 aircraft that are anywhere from brand new to eight years old would be a big plus for the new owner. Interestingly, 56% of these aircraft are fully owned by AI while others are on lease. Air India may be down but not out considering that it serves 50% of international flyers from India, especially on high-value routes. The 4,400 slots that AI has at different airports within the country and 3,300 slots across 42 countries are lucrative. Several reports have suggested that AI’s 9,617 employees may be a drag on the new owner. But, in a market that hardly has enough trained pilots and professionals, this huge human resource is there for the taking and can be tapped, even expanded, to ring in profits within three years. On the other hand, potential suitors could red-flag that Alliance Air is not included in the deal, nor are AI’s land and buildings and its huge and precious collection of artworks. But then selling AI’s different businesses on standalone basis could maximize returns.

If the government is indeed serious about getting out of business altogether, not worrying about letting go of ‘family silver,’ then it should take a call quickly on other loss-making concerns such as BSNL and MTNL whose net-worth is eroding by the minute. Taking other stakeholders like banks, financial institutions and, importantly, the workers on board is a must if the government is to ensure a smooth exit. Providing a 3% stake towards e-sops for high-value professionals in Air India should set a precedence for divestment in other companies, too.