Global industry hit by headwind
The government is committed to the strategic disinvestment of Air India, and a decision on the future course would be taken in the best interests of the national carrier.
Giving this assurance, Civil Aviation Minister noted the financial challenges of the airline which suffers from certain legacy issues, including huge debt.
“The government is committed to strategic disinvestment of Air India. What the modalities are, what the circumstances are, we have to monitor and evaluate as we go along,” Minister of State for Civil Aviation Jayant Sinha elaborated.
Despite India being the most attractive and lucrative civil aviation market with strong growths projected, the government offer of 76% of Air India stake sale failed to attract any bidder at the close of deadline on 31 May 2018.
Also offered with the stake sale was a complete divestment of the carrier’s low-cost arm, Air India Express, and a 50% stake in Air India SATS Airport Services Pvt Ltd, an equal joint venture with SATS Ltd, Singapore’s airport terminal services company.
“As industry circumstances change, we will evaluate all those alternatives. If need be, we can restart that, or any other process given the appropriate market conditions,” said Sinha.
Sinha pointed out that the airline has gone through a remarkable operating turnaround and it is making operating profits.
Air India’s domestic market share stood at 12.8% in May 2018.
“We are reviewing the situation from time to time. We will definitely make sure what is in the best interest of short-term, medium-term and long-term interest of Air India will be done,” he Prabhu underlined.
Air India has a debt burden of around Rs.48,877 crore at the end of March 2018. Out of the total amount, Rs.17,360 crore was related to aircraft and Rs.31,517 crore pertained to working capital loans.
Prabhu pointed out that the global aviation sector is facing a lot of headwinds including rising fuel costs and currency exchange rates.
Keeping Air India healthy and efficient is an important priority for the government, he added. fiinews.com
