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The government of India announced it will sell its majority stake in Air India, the country’s state-run airline.
Or, at least it will try. The nation’s airline, which has been operating at a loss since its 2007 merger with government-operated domestic carrier Indian Airlines Ltd, isn’t the most appealing purchase. Last year alone, the airline posted a net loss of 57.7 billion rupees (about $886 million USD). The carrier has only been sustained by taxpayer bailouts.
Any buyer will become responsible for two-thirds of Air India’s roughly $7.8 billion in debt. That means repaying the Indian government about $5.1 billion, in addition to purchasing the 76% stake in the carrier that Prime Minister Narendra Modi’s administration is offering up. Additionally, the government might ask the buyer to do an initial public offering of the airline, according to a document posted on the country’s civil aviation ministry website.
The upside to purchasing the airline would be lucrative time slots at major airports, such as in New York or London’s Heathrow (LHR), and bilateral rights to start flights in a wide variety of countries. In fact, Air India recently became the first commercial carrier to operate a nonstop flight from New Delhi (DEL) to Tel Aviv (TLV) through Saudi airspace.
Regardless, it seems there are only a couple of potential buyers interested in purchasing Air India’s operations. One buyer that is publicly interested is India’s biggest airline, IndiGo. And Vistara, a joint venture in India run by Singapore Airlines and India’s Tata Group, also said it would be open to looking into the sale.
TPG Editor-at-Large Zach Honig flew Air India from New Delhi (DEL) to New York (JFK) on its 777-300ER and found it wasn’t his favorite business-class service. But, he gave the carrier another shot in February on its Dreamliner, and found the service had somewhat improved.
Featured image by Jack Guez/AFP/Getty Images.
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