Amid talks of the government actively considering a stake sale in loss-ridden state carrier Air India, Union Civil Aviation minister Ashok Gajapathy Raju has said that while he favours the stake sale it may not be an easy job to find a strategic investor, or a ‘bakra’ as he termed it.
"There are hardly any 'bakras' around, so to get one is difficult and businessmen are businessmen. There are limitations. One thing is for sure, the taxpayer's money cannot be committed for eternity. So, that is one problem. Failures are there on the financial front, so, there are problems and these will be attended to," Raju said speaking to a news channel.
Raju’s remark came in response to a question on the NITI Aayog’s proposal for a stake sale, which said that finding a buyer could become easier if the government went ahead and wrote-off the carrier’s debt. Raju has been of the view that AI’s financials are in bad shape and that it was unlikely that it would find a buyer in its current state.
In a detailed submission before the government, NITI Aayog had proposed a write-off of loans to the tune of Rs 30,000 crore besides providing a detailed roadmap for the disinvestment in the national carrier.
The suggestion followed a hint by Finance minister Arun Jaitley indicating that the government was looking at the prospect of privatization in the state-owned carrier. In an interaction last week, Jaitley had said that if private airlines could handle 86 per cent of passenger load, they could well mange 100 per cent too.
"Air India's market share today is around 14 percent while the debt is Rs 50,000 crore while the government has not put in money in private carriers," he told DD News in an interview.
The mess that the Air India’s finance is today is a clear indication that the policy to pump in money into the ailing carrier to revive its fortunes has not worked. The policy for a turnaround which began during the UPA regime has continued under the Modi government as well, with the Centre pumping in Rs 16,822 crore between August 2014 and March 2017 into Air India from the taxpayer’s money.
Under the UPA’s financial restructuring policy, Air India was slated to receive Rs 30,231 crore equity infusion over 10 years. It has received some Rs 23,993 crore so far, with no significant impact.
The airline reported losses of Rs 3,587 crore in 2015-16, down from Rs 5,859 crore in 2014-15.
The airline’s CEO Ashwani Lohani in an open letter on March 15, 2017 had blamed mounting debt as the cause of Air India’s ills.
Lohani had noted, “Of course gross mismanagement at the senior management levels of the company played its part in the rapid downward slide too, but isn't appointing senior management functionaries the function of the governments? Yet the mountain of debt that we acquired appears insurmountable and is at the root of all the problems that manifest as symptoms to all and sundry.”
The airline, which began stating its overall debt position in its annual accounts only since 2014-15, has an overall debt of Rs 52,460 crore. Its net worth is negative and its aircraft project loans have hovered around the same mark of over Rs 22,000 crore since the last five years. Other indicators too are not very impressive.
It’s passenger load factor (PLF) and overall revenues have improved marginally over the years. Losses in 2014-15 stood at Rs 5860 crore. The only profit (of around Rs 15 crore) it ever made in years was in the month of December in 2014 when aviation turbine fuel prices were at an all-time low.