The Indian government wants to privatize its airline. Previous attempts to privatize Air India failed - now two factors are expected to bring success.
Though Air India is the national airline people are not too proud of the airline (anymore). It has been lugging billions in debt for years. In some cases, wages could not be paid either, and planes had to stay on the ground because Air India could no longer afford spare parts. Not surprisingly, the government wants to get rid of the airline.
Therefore, it is now launching a new attempt at privatization. It wants to sell Air India completely, as the Indian media reports. Livemint reports that it is keeping the option open to sell part of the airline to a foreign investor. According to Indian law, however, the majority must remain in Indian hands – thus reducing the number of potential buyers.
Debt strongly reduced
Just under a year ago, an attempt to privatize the Star Alliance member failed. 76 percent of Air India’s shares were up for sale last autumn. But nobody wanted to bid for the airline. On the one hand, perhaps because the state would still have been very powerful with a 24 percent share. On the other hand, because the huge amount of debt at that time was equivalent to more than seven billion euros and discouraged potential investors.
The government has now outsourced half of the debt to a new state-run liquidation company. According to the portal Businessinsider, a potential buyer therefore only has to take over around 1.9 billion in debt. In addition, business is expected to improve this year as well. Due to the bankruptcy of private competitor Jet Airways, other Indian airlines were able to increase ticket prices. Air India hopes to make a profit in 2019 for the first time in years.