The stage is all set for the Centre to sell Air India, but it’s bereft of one key detail—buyers. The government wants to privatise the national carrier both to get brownie points ahead of general elections and to bolster the country’s fiscal buffers. The government’s initial desperateness attracted potential suitors queuing up for the good parts hoping Air India will end up as a garage sale or at least its assets would be sold in bits and bobs to maximise returns. Alas, that wasn’t the case as the national carrier will be sold only as a sum of parts, puncturing the hopes of IndiGo, Emirates, Qatar, and Tatas, who have reportedly backed off.
The loss-making Maharaja is crumbling under a Rs 50,000-crore debt pile, and is surviving on a Rs 30,000-crore life support from taxpayers. Though net losses are widening, its operating profit too is improving, which is why the 10,000-odd workforce is opposing the move saying the stake sale is akin to socialising losses and privatising profits. Besides, as RSS chief Mohan Bhagwat cautioned, no other country has ever allowed a foreign entity to hold more than 49 per cent in its national carrier.
Few airlines make profits and Air India certainly isn’t one of them. By cutting the cord from the parent, i.e., government, chances of a turnaround may be high, but not certain. Cutting ties to the state is no guarantee of good management as well, considering instances of private players like Kingfisher and Paramount sinking into the ground. For now, capital is key and that’s why the government is looking for investors with financial muscle and not necessarily possessing technical expertise. Sweetening the deal, the government clarified that it isn’t mandatory to list the carrier within three years and that the new owner will have operational freedom. While aspects like new terms for interest-bearing debt and fundraising are being clarified, unless the government cuts ice with employee unions, the stake sale proposal is unlikely to take off.