April 25, 2018, 9:57 pm IST
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The Maharaja is for sale

The Maharaja is for sale

 Apr 12, 2018

Air India’s Maharaja is such an integral part of the average Indian’s psyche. The smiling, turbaned, moustachioed smiling figure, the royal mascot of our national airline is in trouble. The airline is up for sale but no buyers have come forward so far. The Civil Aviation ministry on March 28 announced sale of 76% stake of Air India.

Though Indigo Airlines was the first to evince interest last year, it has backed out. Jet Airways has also not come forward. Newspapers have reported that the Tata group may not be interested too as they are already tied up with two other airline ventures. Will Tatas review this decision and move in with a foreign partner only time can tell. However, it has been reported that some foreign airlines are looking at Air India with interest. British Airways, Lufthansa and Singapore Airline are among those that have shown interest in Air India’s disinvestment. A foreign airline can have a Joint Venture in India provided it has a local partner with at least51% stake and effective control.

Air India has a 13% share of the domestic market. News of its sale has upset its employees. 9 unions of AI representing over 10,000 employees have protested this move. They fear the consequential impact on their jobs that the sale will bring about.

Buyers have many challenges to deal with. AI has a total debt of about Rs. 50,000 Crs. Under the terms of sale issued on March 28, bidders will have to take over debt of Rs.24,576 Cr and the current liabilities amounting to Rs.8816 Crs. Most bidders find these terms daunting. Its not just the stake but the debt too. Also, the government will retain 24% stake and the winning bidder will be required to stay invested in the airline for at least 3 years. Besides, the airline cannot be merged with any existing businesses as long as the government has a stake.

As India is predicted to have one of the fastest growing domestic air markets, AI privatisation will draw interest for sure.

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