Debt-heavy Air India to go belly-up if no white knight can be found
INDIAN flag carrier Air India will cease to be if attempts to sell the debt-heavy airline fails, Aviation Minister Hardeep Singh Puri told Parliament a year and half after it went on sale
INDIAN flag carrier Air India will cease to be if attempts to sell the debt-heavy airline fails, Aviation Minister Hardeep Singh Puri told Parliament a year and half after it went on sale.
'The airline will have to close down if it's not privatised,' he said. 'Once we invite bids, then we'll see how many bids will come in.'
A successful sale of Air India is crucial for Prime Minister Narendra Modi to help bridge a widening fiscal deficit exacerbated by dismal tax collections and a US$20 billion corporate tax cut.
Air India, which started as Tata Airlines in 1932 and later became state-owned, hasn't made money since its 2007 merger with state-owned domestic operator Indian Airlines, noted Bloomberg.
The carrier has accumulated $11 billion in debt. Investing more state funds into the airline 'would not be the best use of scarce financial resources of the government,' Mr Puri said.
Prime Minister Modi's administration is considering a plan to exclude $7 billion of the airline's debt in a bid to lure buyers, say Bloomberg sources. The government may call for the so-called expression of interest as early as December 15, they said.
Separately, India's National Company Law Tribunal issued a notice to Air India, asking why bankruptcy proceedings shouldn't be initiated against the state-owned carrier, in response to a pilot's petition seeking outstanding salary dues, according to people with knowledge of the order.
Air India and its Maharaja mascot have become synonymous with Indian pride over the years. Founded by Jehangir Ratanji Dadabhoy Tata, Air India took off flying mail between Karachi and Bombay in then-undivided India.
Once it turned commercial, the airline quickly became popular with its advertisements featuring Bollywood actresses, high-end champagne and Salvador Dali-designed porcelain ashtrays.