Planes fly past a Boeing Co. 787 Dreamliner aircraft, operated by Air India Ltd. (Photographer: Dhiraj Singh/Bloomberg)

Air India Could Shut Down If Not Divested, Warns Consultancy Firm CAPA

The Centre for Asia Pacific Aviation, a leading aviation consultancy, today said it feared Air India could be headed for a two-year loss of $1.5-2 billion, and the failure to divest could see the airline closing down.

It said that unless the bidders were confident that they would be "ring-fenced" from possible political risks, there could be a risk of possible non-participation by interested parties at the 'request for proposal' stage.

On its Twitter handle, CAPA expressed concerns over the ongoing disinvestment process in Air India, calling for amendments in expressions of interest, especially for labour and debt.

"Critical that terms in EOI - particularly for labour and 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%," it tweeted.

The government had on March 28 issued preliminary information memorandum for the proposed sale of up to 76 percent stake in Air India along with management control to private entities.

Also read: Government Extends Deadline For Air India Divestment; Issues Clarifications

It also put out clarifications for 160 questions from interested bidders on the disinvestment of Air India and its two subsidiaries – Air India Express and AISATS.

The opposition Congress and even RSS affiliates such as Swedeshi Jagran Manch had expressed their dissent over the sale of the national carrier.

Also read: Air India Should Only Be Run By An Indian Firm, Says RSS Chief

Industry insiders, however, pointed out that if one was to compare employee cost and strength, Air India was at par with the best in industry.

They pointed out that market leader IndiGo had 17,000 employees for a fleet of 150-160 aircraft while Air India had 138 aircraft and less than 17,000 employees.