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 $20 billion corporate tax cut.
THURSDAY 28, NOVEMBER 2019
India’s aviation minister said that the national carrier will have to shut down if a renewed attempt to sell the debt-laden airline fails to find a buyer a year and half after an attempt to sell the high-profile asset flopped, reported Bloomberg.
Hardeep Singh Puri, India’s Minister of Civil Aviation, said, “The airline will have to close down if it’s not privatised, once we invite bids, then we will see how many bids will come in.”
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.
The international carrier is saddled with $11 billion in debt. A group of ministers overseeing the sale of Air India has already approved selling the entire government stake in the carrier and its low-cost, overseas unit, said Puri.
Puri said that pumping in more taxpayer funds into the airline in a competitive market “would not be the best use of scarce financial resources of the government.
Modi’s administration is considering a plan to exclude $7 billion of the airline’s debt in a bid to lure buyers. The government may call for the so-called expression of interest as early as 15 December 2019.
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.
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 British 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.
TAGS:
Air India
National Company Law Tribunal
Prime Minister Narendra Modi
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