CAPA calls for ‘ring-fencing’ Air India divestment from political risks
05 May 2018
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The Centre for Asia Pacific Aviation (CAPA), a leading aviation consultancy, has asked the Indian government to make the Air India disinvestment terms attractive to investors or face having to close down the national carrier.
In a series of tweets on Friday, CAPA said that unless bidders were confident that they would be "ring-fenced" from political risks, there could be a risk of non-participation by interested parties at the request for proposal (RFP) stage.
It said the debt-ridden national carrier may be headed for a two-year loss of $1.5 to $2 billion.
CAPA called for amendments in the expression of interest terms, especially for labour and debt.
“CAPA estimates AI headed for 2-year losses of USD1.5-2.0 bn in FY19/FY20. Failure to divest could see AI close unless gov’t willing to spend taxpayer funds. Far less costly to make offer more attractive to investors,” CAPA tweeted.
The government had on 28 March issued preliminary information memorandum for the proposed sale of up to a 76-per cent stake in Air India along with management control.
It also put out clarifications for 160 questions from interested bidders on the disinvestment of Air India and its two subsidiaries, Air India Express and AISATS.
The opposition Congress and even RSS affiliates such as the Swadeshi Jagran Manch have expressed themselves against the sale of the national carrier.
But according to PTI, industry insiders said if one compared employees' cost and strength, then Air India was at par with the best in industry. They said market leader IndiGo had 17,000 employees for a fleet of 150-160 aircraft while Air India had 138 aircraft and less than 17,000 employees.
