DBEA55AED16C0C92252A6554BC1553B2 Clicky DBEA55AED16C0C92252A6554BC1553B2 Clicky
February 20, 2024
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Bloomberg is reporting that the attempted sale of Air India by the government has attracted no buyers.  As they point out this is a blow to the Prime Minister.

Since the deal required taking on 66% of the airline’s $7.8bn in debt to get 76% of the company, the lack of excitement is understandable.  Moreover, it is not clear that the buyer could layoff the thousands of people on the payroll the airline does not need.

Last year we speculated the privatization might not occur.  Count us not surprised by the latest news.

Back in 2015, we took a rather negative view of the airline, asking if it should simply be disbanded.

Indeed, a search on our site reveals several stories about the airline.  None of which are especially positive.

The Indian government now has to go back and rework its offering.  Any progress must, in our view, include unbundling assets.  For example, the government might consider taking the airline’s large real estate portfolio and hive that off separately.  Clearly, the buyer needs to have free reign in staffing levels.  And, of course, that debt has to be taken on by the government itself.  The debt is artificial because it was created to support the staffing and votes.  The buyer probably won’t be running for office, so the votes don’t matter.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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