In Remarks before the parliament, seen in News18, The Civil Aviation Minister Of India, Hardeep Singh Puri updated members of parliament about the status of AI’s sale. He made it clear by saying the privatization is the only option for the airline, and if they do not comply will face a shutdown.
This is because the carrier’s debt is at ₹60,000 crores or about 8.28 billion USD. He added that the airline is a first rate asset, the massive debt makes it unsustainable to run. Mr. Puri made it clear that “we need to draw the slate clean”
Currently, their daily cash burn is about ₹20 crores or 2.76 million USD. While this is lower than many other major carriers, it comes even as Air India is now making money, according to Mr. Puri. This means the debt has made the airline unsustainable to fly even while it is making money. So when will we see the carrier to go private hands?
Last week, the government finalized the shortlist of bidders for AI, with the race down to Tata Group (Vistara) and SpiceJet MD Ajay Singh. The 2 bidders will now have roughly 64 days to analyze internal data and place their financial offers.
The government hopes to complete the entire divestment process by May or June of this year. This is certainly an optimistic timeline considering the delays seen in the past, but Mr. Puri has made it clear that the government does not want to hold on to Air India for much longer.
The coming month will tell us more about if the government can stick to this timeline. For now, both Tata and Ajay Singh are likely poring over Air India’s internal data to plan their final bids.
Explaining why the privatization would be different from previous ones, Mr. Puri said that the government is determined to sell the airline and other attempts had been half hearted.
Indeed, the sale will also see the government receive a cash surplus, with at least 15% of the debt being paid upfront by the new owner. Moreover, the sale will mean one less loss-making enterprise for the government to manage during this crisis.