Selling off India's national airline, Air India is facing some serious roadblocks, with only IndoGo showing interest in buying the international business of the carrier, a senior official aware of the development told Business Standard.
The official explained that the problem has only got worse because of the government policy, which barred foreign players from bidding for Air India. These kept foreign airlines like Emirates and Singapore Airlines, which could have been interested, out of the game.
Union Finance Minister Arun Jaitley had recently said that the process was moving "quite well" and the government would soon appoint a transaction advisor to value the company and decide on the contours of disinvestment.
IndiGo had also said that the company is considering investing in Jet Airways, if it fails to acquire a stake in Air India. "IndiGo would go all out to get Air India's international business as the state-owned carrier has international flying rights and slots. Another alternative could be Jet Airways. The company sees an opportunity there," the officer said.
Another reason why investors are not showing much interest in buying the state-owned carrier is because of the company's large debt of more than Rs 52,000 crore. Experts opined that investors will come in depending on how much the government is willing to write off the loans.
Even IndiGo has made it clear that while it would be ready to take the long-term debt on its books, the government has to write off or take some part of the overall debt, BS reported.
Experts estimate that around Rs 30,000 crore of working capital debt needs to be written off for potential buyers to consider acquiring the airline.
Writing off the Rs 30,000 crore debts will lead to a serious financial problem, and the government would be facing serious opposition from Air India unions. Another industry expert believes that selling off the airline won't be an easy task and selling won't bring substantial amounts of cash to the government to help it meet its disinvestment target.
Another stumbling block is the more than 22,000 employees of Air India, which, based on the employee-to-plane ratio, is too high for the national carrier.