Make Air India divestment offer attractive to investors else national carrier may close down soon, warns CAPA

Centre for Asia Pacific Aviation (CAPA), a leading aviation consultancy, has asked the central government, to make Air India divestment offer attractive to investors or be ready to see the national carrier closing down. In a series of tweets on 4 May, CAPA has said that the debt-ridden national carrier may head for two year loss of $1.5 to billion. CAPA expressed its concerns on the ongoing Air India disinvestment process in, calling for amendments in Expression of Interest, 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 aviation consultancy also tweeted, “Unless bidders confident that they will be ring-fenced from possible political risks if successful, this could prove to be a key reason for possible non-participation by some parties at RFP stage.”

It was on March 28 that the central government has issued preliminary information memorandum for the proposed sale of up to 76 percent stake in the national carrier Air India. The government also allowed sale of management control to private entities. However, in the last few weeks, various leading airlines from India and abroad which were once showing interest in taking up stakes in Air India have backed out of the race. This has left the government concerned which is now re-working to make the divestment offer interesting for bidders.

Air India