It seems that Government of India will try and sell Air India in2018. There are pros and cons for buyers. In the past five years, Air India has been on a path to recovery with lower fuel prices and strong passenger growth.
As of March 2017, Air India’s debt stood at Rs48,877 crore. As a result, its funds are depleted. But at an operational level, its routes are doing much better in terms of cost recovery, and private entities will fancy making them more cost-efficient. For any buyer, debt will be an issue, and the government will probably only bundle part of the debt in the sale package.
At the moment IndiGo, run by InterGlobe Aviation Ltd, and Tata group for its airline operations, and the Bird Group for its ground-handling subsidiary are showing interest in Air India.
Any buyer will have to deal with Air India’s complexities and excesses. For example, as of March 2016, Air India had 101 planes, while IndiGo had 94; but while the entire IndiGo fleet was of one type, Air India had 10 type of aircraft across two manufacturers. Plus, it had twice the number of employees. Even subtracting the 6,000-odd employees in its maintenance arm, Air India has a significantly higher employee base and its assets are deteriorating. Ultimately, what the government offers will determine how buyers respond.