Air India Ltd. might be forced to shut down by June next year unless it finds a buyer as “piecemeal" arrangements wouldn't be able to sustain the airline for long, according to a senior airline official.
Air India is saddled with debt of around Rs 60,000 crore, half of which is parked with a special purpose vehicle—Air India Asset Holding Ltd. The airline net loss has been provisionally estimated at Rs 8,556.35 crore in 2018-19. The government has infused Rs 30,520.21 crore in the flag carrier from 2011-12 till December this year.
"We had sought (from the government) Rs 2,400 crore sovereign guarantee to mop up funds for meeting operational requirement. But the government has provided guarantee only for Rs 500 crore,” the official said, requesting anonymity. "We are some how managing the operations at present and, at best, we can sustain this situation till June. If a buyer does not come by that time, we will have to shut shop.”
Air India spokesperson was not available for comments.
To be sure, the government is working out the modalities for its divestment from Air India. The Air India Specific Alternative Mechanism has approved re-initiation of a process for the government's 100 percent stake sale in Air India, along with Air India Express and the carrier's stake in joint venture Air India SATS Airport Services Pvt. Ltd.
The government is likely to issue Expression of Interest for the stake sale in the fourth quarter of the fiscal.
According to the official cited above, it would take "at least" six months to complete the transaction in the eventuality of an investor coming on board, provided the sale process kick starts early next month.
The official did not sound very hopeful of the government getting an investor in such an "economic situation", which has also affected the domestic aviation industry. And response to the recent road shows in Singapore and London for Air India sale was also reportedly "tepid".
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