Air India at Heavy Risk Of Shutting Down


Air India at Heavy Risk of Shutting Down

As Air India sale process continues, The Civil Aviation Minister Of India, Hardeep Singh Puri has made the option clear for Air India. Privatization or Shutdown. In Parliament, he made it clear that The high debt of the airline makes the airline unsustainable to be ran by the government.

Ultimatum

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?

Timeline

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.

Out the door

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.

Sources

Air India Faces Privatization Or Shutdown Utlimatum - Simple Flying

F-WWDN - Air India Airbus A320 NEO at Hamburg - Finkenwerder | Photo ID 848577 | Airplane-Pictures.net

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I would feel bad for Air India VA if this happened!

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I hope to God that it gets privatized. With the government running the airline, the service was terrible.

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But this isn’t just a privately owned airline, its the national carrier of india. Surely the government have to do something about it. They can’t leave it if the airline goes into debt

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They most likely won’t due to the fact that they don’t even want to run the airline anymore, seeing that they want to sell it to someone else.

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But they shouldn’t sell it

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Imo they should, if they keep it they are going to have a failing airline that has a debt of ₹60,000 crores and losing ₹20 crores a day.

Yeah and now I link it to my first point: They aren’t doing much about it, and if that’s why they want to sell it to someone, then thats not a good idea imo

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I love in all of this, the fact that a very major, Indian flag carrier has risk of shutting down, you feel sad about AIVA 😂Gotta love this communtiy.

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Couldn’t agree more

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Well it’d be sad for AIVA as their airline they’re based off would shut down!

Controversial opinion here if you are going to be sensitive and not read please do not reply.

Shut it down. Woah Woah Woah. Yes, I know controversial opinion but hear me out.

They shut down and work on restarting a national airline. They hire a whole new board and executives that go through a rigorous selection procedure to ensure they are fit for the role.

They secure funding from credible sources such as the government, private sector or other airlines investing in it

Once they have gotten a competent staffing team and equity then they start hiring staff again such as pilots, flight attendants, mechanics etc.

The same process once they have enough staff to start operating flights they do so but not immediately go for Delhi to Newark start small to make sure the market is going to respond well and that there is demand.

That was one of Air India’s pitfalls they operated routes that had no demand and had a lot of flights on them which was bleeding money which is never good.

I say they start with flights within India then branch out to Dubai, Qatar, Sri Lanka etc to test those markets and if it doesn’t work cut the routes and find more profitable routes to use the aircraft on don’t keep them on the same money loosing route.

Once they have money, staff and aircraft they start testing the waters of a long haul with Sydney, Singapore, London and Johannesburg to see if they are profitable and can make a constant income for the airline.

If that works they continue with the method and then start working on increasing routes, competition with new products and expanding staff opportunities.

Now I know this is controversial but I hope you can hear my point of view.

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