Air India Was for Sale. Nobody Wanted It.
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
One of the largest countries in the world was unsuccessful in its attempt to find a buyer to turn around its struggling state-owned airline.
The Indian government has stopped the sale of Air India, the country’s flag carrier. Why? Because they received zero bids for the debt-riddled airline.
In March, the Indian government put Air India up for sale — offering a 76% stake in the carrier that has $7.8 billion of debt. It didn’t have a minimum price, but the government was accepting bids from any serious investor. Still, it didn’t receive any offers by the time the bidding period had closed.
The Indian government will continue to support Air India financially, and it surprisingly has plans to place orders for more aircraft. It’s even been reported that the airline will unveil a brand new international first and business class product at the end of this week. TPG reviewers’ experiences on the airline have been downright horrible to pretty solid.
Indian Finance minister Arun Jaitley said that the government will work to make the airline more profitable before they put it up for sale again, even saying that it could list itself on the stock exchange.
“Certain conditions have to be met before listing a company. Once Air India fulfills those, we will go in for an initial public offering and subsequent listing,”Jaitley said.
Air India would have to post a profit for three years straight before it can list itself on the stock exchange. The airline hasn’t had a single profitable year since 2006.
Potential buyers were reportedly worried by the the $5.1 billion in debt they would have to take on, as well as the fact that the government was going to retain ownership of 24% of Air India. The terms of the deal also forbid anyone from merging the airline with its own business as long as the government held a stake in the carrier.
“The airline is posting operational profits,”Jaitley said. “None of the flights goes empty. With all the cost-efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now.”
A report from the Mumbai Mirror shows how messy Air India’s financials are. The airline is covering about half of its employee’s salaries ($15 million) through the rental of its old headquarters in Mumbai. The iconic building was constructed in 1976 and was one of the city’s first skyscrapers.
H/T: Airways Magazine
Featured image by Bruno Geiger / Flickr.
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in your first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at US restaurants with your card within the first 3 months of membership.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees