CAPA: Air India may shut down soon

Major aviation consultancy, Centre for Asia Pacific Aviation (CAPA) has urged the Central government to make the process of Air India Privatization investor-friendly otherwise it might soon shut down. CAPA, through its Twitter account said that “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 govt willing to spend taxpayer funds. Far less costly to make offer more attractive to investors”.

According to CAPA, the three key themes emerging on Air Indian divestment are: 1) Critical that terms in EOI – particularly for labour & debt – are amended, as successful bidder will need to invest in restructuring and absorbing losses for several years, in addition to consideration paid for 76 per cent. 2) 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.  3) 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.

Earlier this week, the government came out with a set of clarifications on the proposed strategic disinvestment in Air India and said individuals other than the airline’s employees would not be allowed to bid.