Air India may shut down in the coming months if it is not privatised. Recently, during the Winter Session of the Parliament, Hardeep Singh Puri, the Civil Aviation Minister of India, said, “The airline will have to close down if it’s not privatised.”
Mr. Puri said privatisation efforts are being made for Air India and the process is expected to finish by June 2020.
The Government owned Air India has been facing losses of Rs. 4,685 crores over the past few years. In the fiscal year (FY) 2019, the airline suffered a loss of Rs. 1,685 crores. In addition, Air India is in debt amounting to Rs. 60,000 crores and has liabilities of Rs. 15,000 crores, including vendors, employees and air operations employees.
An official of Air India, who wished to remain anonymous, spoke about how Air India is managing funds when the airline is in debt and loss and said, “We will work till we can; if they (Government) do not want to give us more funds, and if they ask us to shut shop, we will. We have no option.”
The official further added, “We have recovered eight grounded widebody aircraft including two Boeing 777s and four B787-800s (Dreamliners.) Twelve Airbus A320 family aircraft are still grounded. A few of these aircraft will be used on the Mumbai Stansted route that is set to start in February 2020.
The senior official also added Air India would need an amount of Rs. 150 million dollars to balance the expenses of the aircrafts and to recover from the current situation. He further said, “We had sought Rs. 2,400 crores sovereign guarantee to mop up funds for meeting operational requirements. So far, the Government has issued Rs. 500 crores guarantee.”
On the other hand, the Government of India (GoI) said it invested Rs. 30,520.21 crores in Air India from FY 2011-2012 till December 2019.
According to the Air India official, the reason behind Air India suffering from losses is the high maintenance aviation industry and the debt exceeding the profit. Besides, taxation and FDI norms are also responsible for the airline’s loss.
The auction of Air India would be done within 6 months from now because if the privatisation process does not take place within 6 months, it would be difficult for the airline to survive. The Government recently had to shut down 5 other airlines, including Jet Airways, Air Costa, Air Odisha and Air Pegasus.
Stay tuned for further updates.
