Wednesday, October 11, 2017

It's official: Tata Group shows keen interest to buy Air India: Report

TATA Group, the original owner of Air India, may take over the reins of the Maharajas, when the privatization of the beleaguered airliner gets underway later this year. N Chandrasekaran, Tata Sons Executive Chairman has officially remarked on the Tata Group interested in the disinvestment of Air India. The news which broke four months ago that Tatas may be looking to pilot Air India again was confirmed as the chairman said in an interview to a TV channel.
Tata Group founded the airliner 85 years back.
However, the group is awaiting more details from...
the government on the disinvestment process.
“We still don’t have all the details. Every business proposal will be very seriously looked at and we will look at that (Air India). Definitely. But currently we don’t have the data. There are so many different groups within Air India and then there is real estate, there is debt, there is liabilities and we got to look at all of that it but we will definitely look at it,” Chandrasekaran said.
He also spoke in reference to Vistara airlines run in alliance with Singapore Airline stating, the group could not remain with a “fleet of just over a dozen planes.” The Tata Group also owns AirAsia India.
“We need to look at aviation as a whole. We are subscale. We got two airlines both are subscale. Any decision that we take—Air India or otherwise—we have to have a story because we can’t be operating with 15 aircraft or 20 aircraft. I feel scale is important, in every industry in every group we operate in scale is important. Without scale you get to a situation where you are all over the place and it is very, very difficult to pay management attention," he added.
However the group has looked into the sale of Air India before as well.
Air India has become a symbol of government's utter inability to do business. It is saddled with huge debt. The mounting debt is the reason the government wants to exit Air India. The Narendra Modi government has infused nearly Rs 16,000 crore since coming to office in 2014, and the central exchequer is no longer keen on keeping the airline afloat with little sign of a revival.
Air India’s domestic market share is 13 per cent and nearly 75 per cent of its capacity is used for international flights.
Will the Tata Group buy Air India for emotional reasons? No. Despite its debt and operational mess, it still has great value. Many even see its debt being balanced by its reach and spread. It has a fleet of 118 aircraft and flies the highest number of passengers to and from India according to Directorate General of Civil Aviation data. It also has coveted parking slots in airports round the world such as New York, Chicago and London besides 18 morning departure slots in Mumbai alone.
In November, 2000, a Tata Sons press release said, "Singapore Airlines is a global player with impeccable credentials ... Its airline operating competency will be a significant asset to the consortium and will be critical in ensuring the success of Air India in the international market place."
Air India is currently reeling under a Rs 55,000 crore debt. As recently as August, the government had infused funds amounting to Rs 927 crore in the national carrier. The airline has been facing a cash crunch and its employees have reportedly suffered due to delayed salaries. The aviation ministry has also expressed concerns over privatisation proposals stating the plan for revival of Air India would be taken up by the cabinet only after various issues, including the concerns raised by the parent ministry, are resolved. The privatisation process was speculated to begin as early as December 2017.

No comments:

Post a Comment