raylee67
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 1:34 pm

AntonioMartin wrote:
raylee67 wrote:
It would be a large airline, yes, but is it one of the largest airline in the world, not even close. As you point out, the combined airline has a fleet of 251 aircraft. That is still less than even Air Canada (which has 387 aircraft between mainline, Express and Rouge).x.


That, plus Indigo's network of only seven international routes. It would be large, but not as large as the US big 3 or the middle east big 3, or Lufthansa, Ba or Air France for that matter....

Wonder which name would stay, through...probably Air India, right?

The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.
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dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 2:09 pm

raylee67 wrote:
The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


Most of AI's current negative image is the result of

1) Unlimited ME3 PR budget
2) Mumbai's collective grudge for moving HQ to Delhi.
3) Indian journalists/bloggers writing bad news for free food
4) Unions using it as tool against management/owners
5) GoI deflecting blame to cover its own shortfalls
6) Spineless/teeth-less management.

Lets look at the future.
1) ME3 will continue to target whoever is their biggest competitor, name/owner doesn't matter.
2) Mumbai will continue to hold grudge, may be even more if the Private AI closes crew base and sells MRO business.
3) Indian journalists/bloggers will continue to write bad news for <imported> free food,
4) Unions (or whatever left over of it) will continue to fight
 
Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 4:13 pm

dtw2hyd wrote:
raylee67 wrote:
The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


Most of AI's current negative image is the result of

1) Unlimited ME3 PR budget
2) Mumbai's collective grudge for moving HQ to Delhi.
3) Indian journalists/bloggers writing bad news for free food
4) Unions using it as tool against management/owners
5) GoI deflecting blame to cover its own shortfalls
6) Spineless/teeth-less management.

Lets look at the future.
1) ME3 will continue to target whoever is their biggest competitor, name/owner doesn't matter.
2) Mumbai will continue to hold grudge, may be even more if the Private AI closes crew base and sells MRO business.
3) Indian journalists/bloggers will continue to write bad news for <imported> free food,
4) Unions (or whatever left over of it) will continue to fight


I'm guessing that the delays and reliability, poor service and steady stream of embarrassing incidents has nothing to do with it?
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lightsaber
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 4:21 pm

Antarius wrote:
dtw2hyd wrote:
raylee67 wrote:
The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


Most of AI's current negative image is the result of

1) Unlimited ME3 PR budget
2) Mumbai's collective grudge for moving HQ to Delhi.
3) Indian journalists/bloggers writing bad news for free food
4) Unions using it as tool against management/owners
5) GoI deflecting blame to cover its own shortfalls
6) Spineless/teeth-less management.

Lets look at the future.
1) ME3 will continue to target whoever is their biggest competitor, name/owner doesn't matter.
2) Mumbai will continue to hold grudge, may be even more if the Private AI closes crew base and sells MRO business.
3) Indian journalists/bloggers will continue to write bad news for <imported> free food,
4) Unions (or whatever left over of it) will continue to fight


I'm guessing that the delays and reliability, poor service and steady stream of embarrassing incidents has nothing to do with it?

How about the consistent inability to make money? AI losses double digits percentages of everything they take in.

I still believe Indigo will not buy AI, but is instead looking at the books to see where/how to expand.
That said, they have been clear they only want international operations which the GoI is loath to split off.

Someone explain what AI is spending money on to loose so much money when their operations are almost break even. Are these expenses that could be quickly cleaved off? Or are they operational expenses moved into the non-operational budget (maintenance). This is important.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
raylee67
Posts: 714
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 4:23 pm

dtw2hyd wrote:
raylee67 wrote:
The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


Most of AI's current negative image is the result of

1) Unlimited ME3 PR budget
2) Mumbai's collective grudge for moving HQ to Delhi.
3) Indian journalists/bloggers writing bad news for free food
4) Unions using it as tool against management/owners
5) GoI deflecting blame to cover its own shortfalls
6) Spineless/teeth-less management.



These may be true domestically. But international passengers don't read Indian newspapers. Number 2 to 6 in your list won't apply. ME3 does not advertise against Air India in international market. They target SQ, LH, CX, AF, DL, etc. I know people from Hong Kong buying AI ticket from HKG to ICN or KIX only do it for one reason, and the reason is that AI's ticket is cheaper than LCCs. Whether it's truthful or not, they expect the flight to delay, plane to be dirty, food to be bad, etc. Again, these are just perception, may be some from the days when AI was flying A310 on those routes. But that's all it matters. AI simply cannot raise the ticket price with these perception persisting. The moment they raise the price, those passengers go to other airlines.
319/20/21 332/33 342/43/45 359/51 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788/89 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
AY LH OU SR BA FI
AA DL UA NW AC CP WS FL NK PD
CI NH SQ KA CX JL BR OZ TG KE CA CZ NZ JQ RS
 
dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 4:44 pm

lightsaber wrote:
Someone explain what AI is spending money on to loose so much money when their operations are almost break even. Are these expenses that could be quickly cleaved off? Or are they operational expenses moved into the non-operational budget (maintenance). This is important.

Lightsaber


The single line item killing AI books is $600M - $700M debt service cost. Most of that money goes back to state owned banks.

If AI is allowed to borrow money global banks, it will save $300M instantly. This is not just AI problem, no airline can borrow working capital from global banks.

Like I said probably 100 times, India cannot have a competitive aviation sector with protected financial sector. But I think with failed demonetization, protecting banks is top priority than saving an airline.
 
dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 4:53 pm

raylee67 wrote:
....... ME3 does not advertise against Air India in international market.....


In case you didn't know, most of the "Never AI" crowd on internet are paid social media warriors and travel agents who make more commission on peddling ME3 tickets to Indians. It is part of marketing.

There are probably dozens of incidents like one crew lined up with taxiway with 1000 souls, one crew descended to wrong altitude, there is an airline union in west which has a thing against bleed air and keeps declaring unexplained emergencies, burnt up a plane on a botched long landing, locked the door and CFIT into a mountain. But only AI professionalism is always under review.
 
Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 5:16 pm

dtw2hyd wrote:
raylee67 wrote:
....... ME3 does not advertise against Air India in international market.....


In case you didn't know, most of the "Never AI" crowd on internet are paid social media warriors and travel agents who make more commission on peddling ME3 tickets to Indians. It is part of marketing.


So lets get this straight.. AI is a (on a global scale) a tiny player, that has a crap reputation and is mired in government meddling and truckloads of debt. Yet somehow there is this covert gestapo scheme to pay people to badmount AI. Occam's razor dude..

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SVJ77W
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 5:17 pm

From The Hindu News:

Govt. may not split Air India for stake sale

Officials fear investors may be put off

The central government may not sell Air India’s domestic and international operations separately, senior government officials have said. “We are not willing to go back to the days of Air India and [erstwhile] Indian Airlines as the disinvestment process of the national carrier may become unattractive,” a senior Aviation Ministry official, requesting anonymity, said.

This might come as a hurdle to low-cost airline IndiGo’s plan to buy a stake in AI as it was keen on acquiring its international operations.

“AI’s business cannot be split merely based on an expression of interest from a single private player. If we sell lucrative assets separately, it will make the divestment of the domestic unit and subsidiaries tricky,” the official added.

“If we sell lucrative assets of Air India separately, it will make the process of disinvestment of its domestic unit and subsidiaries tricky,” the official added.

The Central government’s concern is that Air India’s valuation may further take a hit if it hives off Air India into two companies and invites bids for its domestic and international operations.

Barely hours after the Union Cabinet gave its in-principle nod to divest stake in Air India last month, India’s largest low-cost carrier IndiGo expressed formal interest in its airline operations. However, the airline made it evident that it will be keen on buying Air India’s foreign operations and its low-cost international airline Air India Express.

“Acquiring all of the airline operations of Air India brings with it a lot of other issues and many more challenges and complexities. We would evaluate that option and assess if it is economically feasible for us to go down that path,” IndiGo’s co-founder Rahul Bhatia told analysts in a conference call on July 6. Mr. Bhatia also said it was eyeing its international operations “from day one.”

He had, however, added that if the government decided to sell Air India’s entire airline operations to a single entity “and not carve out the international operations, we would still be interested in exploring that option.”

IndiGo, which serves seven international destinations, is planning to start low-cost international operations and said acquiring Air India’s foreign operations will help the airline in getting “rapid entry into restricted and, in some cases, closed international markets.”

Air India has a wide range of international operations across the U.S., U.K., Europe, Russia, Australia, South-East Asia and Gulf countries. It flies to attractive destinations such as Sydney, Tokyo, Shanghai, Rome, Osaka, Paris, Newark, New York, Moscow, London, Frankfurt, Chicago, among others.

During the conference call, Mr. Bhatia had acknowledged the fact that the government may not be interested in carving out the international operations based on its formal expression of interest which was intended to give a road map to the policy-makers on Air India’s stake sale. “So, first we have to see what exactly the government would like to do,” he said.

More on the link below:
http://www.thehindu.com/business/Industry/govt-may-not-split-air-india-for-stake-sale/article19360158.ece
 
dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 5:35 pm

Antarius wrote:
So lets get this straight.. AI is a (on a global scale) a tiny player, that has a crap reputation and is mired in government meddling and truckloads of debt. Yet somehow there is this covert gestapo scheme to pay people to badmount AI. Occam's razor dude..


Looking good Antarius. If you remove tin foil hats and put your neurons to use, India is one of the top revenue sources for ME3.

Any significant recapture of traffic by AI (or any Indian carrier) ME3 will go down in a snap. Hence the ruckus whenever they a tire burst.
 
Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 7:15 pm

dtw2hyd wrote:
Antarius wrote:
So lets get this straight.. AI is a (on a global scale) a tiny player, that has a crap reputation and is mired in government meddling and truckloads of debt. Yet somehow there is this covert gestapo scheme to pay people to badmount AI. Occam's razor dude..


Looking good Antarius. If you remove tin foil hats and put your neurons to use, India is one of the top revenue sources for ME3.

Any significant recapture of traffic by AI (or any Indian carrier) ME3 will go down in a snap. Hence the ruckus whenever they a tire burst.


The ME3 still own the one stop market. Other than SFO-DEL nonstop travelers, the majority of premium passengers would prefer the hard and soft product of the ME3 and connecting in AUH, DOH or DXB as opposed to DEL. India is an important market, AI isn't a real competitor as it stands.

As a result, Occam's razor says that a deep covert PR scheme to subvert the runt of the litter is unlikely. Do you have any proof of this assertion?
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AntonioMartin
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 11:21 pm

raylee67 wrote:
AntonioMartin wrote:
raylee67 wrote:
It would be a large airline, yes, but is it one of the largest airline in the world, not even close. As you point out, the combined airline has a fleet of 251 aircraft. That is still less than even Air Canada (which has 387 aircraft between mainline, Express and Rouge).x.


That, plus Indigo's network of only seven international routes. It would be large, but not as large as the US big 3 or the middle east big 3, or Lufthansa, Ba or Air France for that matter....

Wonder which name would stay, through...probably Air India, right?

The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


Exactly...
 
AntonioMartin
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 11:25 pm

dtw2hyd wrote:
raylee67 wrote:
5) GoI deflecting blame to cover its own shortfalls

Gol Airlines of Brazil?????
 
Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Thu Jul 27, 2017 11:51 pm

AntonioMartin wrote:
dtw2hyd wrote:
raylee67 wrote:
5) GoI deflecting blame to cover its own shortfalls

Gol Airlines of Brazil?????


GoI = Government of India
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dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 12:32 am

Antarius wrote:
The ME3 still own the one stop market. Other than SFO-DEL nonstop travelers, the majority of premium passengers would prefer the hard and soft product of the ME3 and connecting in AUH, DOH or DXB as opposed to DEL. India is an important market, AI isn't a real competitor as it stands.

No ME3 doesn't own India's international market. That is just another PR gimmick. 9W is #1, AI #2 and EK comes distant #3.

Check data published by Indian aviation regulator.

Antarius wrote:
As a result, Occam's razor says that a deep covert PR scheme to subvert the runt of the litter is unlikely. Do you have any proof of this assertion?


You having a problem with my statement is the proof.
 
Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 12:36 am

Antarius wrote:
As a result, Occam's razor says that a deep covert PR scheme to subvert the runt of the litter is unlikely. Do you have any proof of this assertion?


You having a problem with my statement is the proof.


Strawman much?

So challenging an assertion of cloak-and-dagger stuff is somehow is proof of a conspiracy? This is getting ridiculous. No wonder AI is such a trainwreck, if its management had its head up its backside this much... no surprise that they can't see how poor their overall product is.

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Antarius
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 12:45 am

Again, please offer some proof. Otherwise, this conversation is not worth having. Its sour grapes/blame the other guy for our failures stuff
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AntonioMartin
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 5:27 am

Antarius wrote:
AntonioMartin wrote:
dtw2hyd wrote:

Gol Airlines of Brazil?????


GoI = Government of India

Ohh..lol! :lol:
 
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kitplane01
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 6:42 am

lightsaber wrote:
I suspect the expression of interest by Indigo is for political gain/PR rather than real. A leg in to get gates and slots when the inevitable liquidation of AI occurs. Yes, I said it.


I politely disagree. Air India is not going bankrupt. It's not being sold. It will remain as it is now. Muddle forward. Get another bailout. Repeat.

lightsaber wrote:


This expression of interest will prevent Tata from getting a discounted AI.


I rather thought the fair market value of Air India was less than zero.
 
dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 11:35 am

kitplane01 wrote:
... It's not being sold.

I rather thought the fair market value of Air India was less than zero.


I wouldn't bet the farm on that. Once Modi set his eyes on AI, it is toast. Even if AI sales needs a constitutional amendment, Congress has to go along with the plan, otherwise, CBI will ramp-up 2006 aircraft purchases investigation.

I think a lot of posturing going on to set the stage to give away AI to friends for peanuts. GoI will cook up conditions to achieve this, even there are other bidders.

Qatar is interested
GoI: We want AI to remain Indian owned

Indigo made an unsolicited offer
GoI: We don't want to split AI

Private Equities showed interest
GoI: We want an airline to buy AI for employee sake.

See the pattern, they will keep changing the conditions until everyone else drops out and night before election commission announces 2019 general elections, AI will be sold.
 
CaliguyNYC
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 4:07 pm

AI should be sold on the cheap and without a huge debt burden. It's more important to (1) have the government out of aviation, (2) stop pouring in tax money and (3) have an efficient Indian owned airline. Let it go to any of the local players that pays the highest. That said, I really don't think anyone needs AI to grow. To me Indio is just making up excuses and cherry picking what it needs. I really view the buyer as doing the GOI a favor rather than the other way around. AI needs a lot of help to turn it around. Oh there is nothing to stop those International equity investors with partnering with a local airline (which is what they would probably do given that AI's management is not know for their skills and private equity never runs these type of investments).
 
dtw2hyd
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 4:18 pm

So state owned Indian Banks can write-off $5 Billion AI good debt in one day, but cannot waive farm loans when 1000s of farmers are committing suicides.

Sell it to Qatar without any debt write-off. They are the only one capable of pumping money or can sell real estate and pay off debt. If QR opens the second hub in ME this opportunity also will pass.
 
kaitak744
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 4:49 pm

anshabhi wrote:
Destinations: A relatively small domestic but a massive international network, along with many long hauls.


Massive international network? by what standards? They can't find anywhere to fly their 777s to...
 
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BawliBooch
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Re: Would an AI IndiGo merger produce a global Giant?

Fri Jul 28, 2017 5:23 pm

    anshabhi wrote:
    At the time of writing, IndiGo fleet:
    113 A320
    22 A320NEO

    On Order : 388 A320NEO + 20 A321NEO + 50 ATR 76

    Destinations: Mostly domestic and 7 international, in ME and SE Asia.

    Air India:
    22 A319
    25 A320
    7 A320NEO
    20 A321
    4 B744
    3 B77L
    12 B77W
    23 B788

    On order: 7 A320NEO + 3 B77W + 4 B788

    Total: 251 Aircraft + 472 on order.

    Destinations: A relatively small domestic but a massive international network, along with many long hauls.

    Now see, IndiGo has such a good feed network that it can develop any of the 5 major airports in India as its hub - Delhi, Mumbai, Chennai, Bangalore or Kolkata.
    What we are talking about here is a bilateral restriction free airline, a booming home market and an awesome management. Do you think if this merger goes through, we will have the next airline giant or the next Emirates?


    Another purely speculative thread from anshabhi not based on facts.

    Indigo is not serious about bidding for AI - international or domestic. End of story.

    As they say in my part of the country, close the books & mattress and go to bed kids!
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    CaliguyNYC
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 5:24 pm

    dtw2hyd wrote:
    So state owned Indian Banks can write-off $5 Billion AI good debt in one day, but cannot waive farm loans when 1000s of farmers are committing suicides.

    Sell it to Qatar without any debt write-off. They are the only one capable of pumping money or can sell real estate and pay off debt. If QR opens the second hub in ME this opportunity also will pass.


    Sure if I believed QR had any intention of building it's second hub in India. Look at the lost opportunity that was EY"s investment in 9W. Other than start flights to AUH, 9W contracted during the peak of EY's influence. Also the great EY could not help improve 9W's service standards and on board product. 9W is worse today then 10 years ago. EY burned money on AZ Air Berlin but did not push 9W to really do anything. Remember the news stories of EY saying other than the flights that were then, 9W will have to route all Africa and EU traffic through AUH (I have no link to this, but seem to remember reading it, maybe on here).

    But hey if as part of the deal, QR understands that no more seats will be granted until Indian airlines use up their seats to Qatar AND that AI would count towards Qatar's seats not India's. Let QR buy AI. They will know the only way they can grow out of India is to build up DEL and other Indian hubs. I don't see this happening though. I think Qatar wants the same flawed deal EY got - with the investment they get more seats between India and Qatar. They would then start to pull down AI's nonstop US and EU flights.
     
    klakzky123
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 5:56 pm

    The ME3 have been able to import a lot of expertise and management from abroad to run the airlines. That isn't really possible once you branch out of the region so you have to start using what you have and none of the middle eastern carriers have the change management expertise to actually reform carriers from within. The cultural, social and legal differences between each airline are large enough to make it impossible to manage without having local expertise. Money can't fix high labor costs, cultural issues and increasingly competitive local markets.

    AI wouldn't be an exception to this problem. If anything it will be worse. It'll turn into an Alitalia situation where the domestic ops are complete money pits and only a handful of international routes make any money with labor unions and costs that will be resistant to foreign ownership.
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 6:00 pm

    I wouldn't completely blame EY, other than their lack of understanding how working capital works in India.

    If you buy 24% stake initially at $300 Million and later realize you need a $1 Billion to run the enterprise, you cannot bring money into India, even if you have money in Abu Dhabi. You will see the same struggle by SIA to bring more capital into Vistara.

    Delta will suffer the same fate if it picks up a small 9W stake for $300M.

    For this single reason, it is better to overvalue and pickup debt obligations as part of the initial purchase for $3B-$4B, you can get out this mess. Hence my inclination towards Qatar.

    Once the transaction is complete, you are subject to external borrowing limitations and Indian Banks will drain your blood.
     
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    BawliBooch
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 6:04 pm

    dtw2hyd wrote:
    You will see the same struggle by SIA to bring more capital into Vistara.

    :D Love you man!

    so interesting you mention this!

    prepare for some interesting news in this area in a few days time! Its time foreign airlines learnt something about the Indian aviation market! SQ gets first dibs! :P
    Mr.Kapoor's favorite poodle!
     
    vadodara
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 11:11 pm

    CaliguyNYC wrote:
    AI should be sold on the cheap and without a huge debt burden. It's more important to (1) have the government out of aviation, (2) stop pouring in tax money and (3) have an efficient Indian owned airline. Let it go to any of the local players that pays the highest. That said, I really don't think anyone needs AI to grow. To me Indio is just making up excuses and cherry picking what it needs. I really view the buyer as doing the GOI a favor rather than the other way around. AI needs a lot of help to turn it around. Oh there is nothing to stop those International equity investors with partnering with a local airline (which is what they would probably do given that AI's management is not know for their skills and private equity never runs these type of investments).


    The largest value is more likely to be extracted by some investment bank where they will sell-off AI's slots at key airports like LHR to the highest bidder. GOI may find that to be unpalatable.

    In that respect, perhaps, sell off the entire animal to the highest Indian bidder. Obviously, that means Tata's have the inside track because:
    a) Ratan Tata is a bottom's up man; makes business decisions from his bottom
    b) They still have too much emotion attached to Air India
    c) They have been putting money on the table

    IndiGo, perhaps sensing this, made an offer for the old AI but not IA; what does GOI do with the rump AI? After pumping money for a decade prove that the AI-IA merger was a bad idea? Much better to unload the entire thing as is.
     
    vadodara
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    Re: Would an AI IndiGo merger produce a global Giant?

    Fri Jul 28, 2017 11:12 pm

    Antarius wrote:
    dtw2hyd wrote:
    raylee67 wrote:
    The Air India name is for sure more recognized internationally, but it is also not a name that international passengers linked with good services. May not be a bad idea to restart with the Indigo name internationally. On the other hand, the Indian government may not like the Air India name gone.


    Most of AI's current negative image is the result of

    1) Unlimited ME3 PR budget
    2) Mumbai's collective grudge for moving HQ to Delhi.
    3) Indian journalists/bloggers writing bad news for free food
    4) Unions using it as tool against management/owners
    5) GoI deflecting blame to cover its own shortfalls
    6) Spineless/teeth-less management.

    Lets look at the future.
    1) ME3 will continue to target whoever is their biggest competitor, name/owner doesn't matter.
    2) Mumbai will continue to hold grudge, may be even more if the Private AI closes crew base and sells MRO business.
    3) Indian journalists/bloggers will continue to write bad news for <imported> free food,
    4) Unions (or whatever left over of it) will continue to fight


    I'm guessing that the delays and reliability, poor service and steady stream of embarrassing incidents has nothing to do with it?


    That's mother of all fake news! In fact, this is an active conspiracy agains Air India. Even Modi govt. is a party to this.
     
    MIAFLLPBIFlyer
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 1:25 am

    My single biggest issue with AI is as a South Indian they've never really provided the service to the part of the country I need to fly to from where I live (the USA) that non-Indian carriers and at times 9W have provided. Clearing customs and then connecting in Delhi or Mumbai is not something that's terribly pleasant. But the other stuff I get- AI has a perception problem for whatever reason. Whether it's the six reasons listed above and colliding I cannot say. But to deny the airline has a perception problem, not only in India, but in the west and in East Asia is simply living in a fantasy world.

    The idea of a national flag carrier being absorbed by an LCC is pretty stunning and something that I'd hate to see. But it might be coming and not just in India. The industry is changing and we must accept that.
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 2:10 am

    There is no denying AI has bad image worldwide and there is no denying the 6 parties are involved.

    The list includes
    - Competitors who wish AI is a goner
    - A city which was milking AI
    - Pay for planted news journalists
    - Employees
    - Owner who loads debt but doesn't want to infuse equity
    - and Management

    The only issue, everyone thinks it is the other 5.

    Get rid of AI without costing an additional penny to tax payers,
    Don't give a $5B gift(debt write-off) to corporate friends.
     
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    CanadaFair
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 3:34 am

    AntonioMartin wrote:
    Antarius wrote:
    AntonioMartin wrote:
    Gol Airlines of Brazil?????


    GoI = Government of India

    Ohh..lol! :lol:

    Never understood why GoI is used when simply govt.will suffice, since the discussion is about India.
     
    AntonioMartin
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 8:13 am

    CanadaFair wrote:
    AntonioMartin wrote:
    Antarius wrote:

    GoI = Government of India

    Ohh..lol! :lol:

    Never understood why GoI is used when simply govt.will suffice, since the discussion is about India.

    It can be quite confusing here to read Gol .. :lol:
     
    CaliguyNYC
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 2:27 pm

    Couple of things in response to posts above:
    1) AI has an enterprise value that is net of debt. If Ai is worth $1B and it has $5B in debt, then the GOI would need to pay someone $4B to take over the company. That is the way valuation works.
    2) How is BOM bleeding AI dry? No one in BOM cares that AI launches nonstop flights to the US from DEL (never seen an article complaining or even posts on this site). Its only people from the South that complain. BOM employees rightly kept their jobs when AI moved their HQ to DEL. But an airlines HQ doesn't affect where crews need to be. Plus as people retire, they are hired in DEL or where ever AI wants them based.
    3) AI serves the South. It has always flown to SIN, KUL, CMB & the Gulf from the South which was the main destinations for decades. It is only recently you have a critical mass of Southerns in NA. Right now, AI's hub absolutely has flights to the south that confidently connect to their EU and US nonstops. That is serving the South in the same way the ME3 do (meaning one stop connections with 3 hours or less connecting time). That's the definition of a hub network carrier. AI's SFO flight continues to BLR, ORD/IAD to HYD. Plus all the Gulf flights. So how does Ai not serve the South? And BOM and DEL are very convient connecting airports as they are small and with options if you misconnect. The issues that were in the old airports really aren't relevant anymore. It's so confusing why people keep bringing up the old airport on an avaiation enthusiast forum (meaning you have got to know that BOM and DEL have new airports).
     
    Antarius
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 8:50 pm

    dtw2hyd wrote:
    There is no denying AI has bad image worldwide and there is no denying the 6 parties are involved.

    The list includes
    - Competitors who wish AI is a goner
    - A city which was milking AI
    - Pay for planted news journalists

    - Employees
    - Owner who loads debt but doesn't want to infuse equity
    - and Management

    The only issue, everyone thinks it is the other 5.[/b]


    Source? You keep repeating this claim without a shred of proof. Please offer some substantiation to your claims.
    19:SIN HKG NRT DFW IAH HOU CLT LGA JFK SFO SJC EWR SNA EYW MIA BOG LAX ORD DTW OAK PVG BOS DCA IAD ATL LAS BIS CUN PHX SYD CVG PHL MAD ORY CDG SLC SJU BQN MHT YYZ STS DOH BLR KTM MFM MEX MSY BWI BNA
     
    Antarius
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sat Jul 29, 2017 8:53 pm

    CaliguyNYC wrote:
    3) AI serves the South. It has always flown to SIN, KUL, CMB & the Gulf from the South which was the main destinations for decades. It is only recently you have a critical mass of Southerns in NA. Right now, AI's hub absolutely has flights to the south that confidently connect to their EU and US nonstops. That is serving the South in the same way the ME3 do (meaning one stop connections with 3 hours or less connecting time). That's the definition of a hub network carrier. AI's SFO flight continues to BLR, ORD/IAD to HYD. Plus all the Gulf flights. So how does Ai not serve the South? And BOM and DEL are very convient connecting airports as they are small and with options if you misconnect. The issues that were in the old airports really aren't relevant anymore. It's so confusing why people keep bringing up the old airport on an avaiation enthusiast forum (meaning you have got to know that BOM and DEL have new airports).


    The issue is, why would you choose to fly SFO-DEL-south india when you could fly SFO-DXB-south india? On every count, EK beats AI, from hard product, to soft product, to timeliness, to connecting airport quality etc.

    The nonstops are best for O&D traffic. AI would be better off going to a multi hub approach, such as BLR-SFO nonstop to try to grab as much O&D traffic as possible and eliminate the connections. As it stands, no one (maybe except for anshabhi and his ilk) would willingly choose AI over the ME3 for a 1 stop flight.
    19:SIN HKG NRT DFW IAH HOU CLT LGA JFK SFO SJC EWR SNA EYW MIA BOG LAX ORD DTW OAK PVG BOS DCA IAD ATL LAS BIS CUN PHX SYD CVG PHL MAD ORY CDG SLC SJU BQN MHT YYZ STS DOH BLR KTM MFM MEX MSY BWI BNA
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sun Jul 30, 2017 2:28 pm

    Here are some assets AI holds

    Financed(owned) aircraft
    - 43 x A320 family (2006 deliveries, almost paid off)
    - 15 x B777s (Deliveries up to 2009- so four more years to pay off)

    Subsidiaries, current valuations
    - AIX - $1.2B
    - AIESL - $500 M (33 hangars in 6 MRO locations, no one in Asia has that kind of infrastructure)
    - AITSL - $300 M
    - AISATS - $150 M (Already a Singapore JV)

    Slots
    - DEL -??
    - BOM - ??
    - LHR 7x$75M - $525M
    - Old rights(Can be sold for huge profit) - JFK,EWR,ORD,FRA,CDG,DXB,AUH,RUH,JED,,SHJ,RAK,MCT,KWI,SIN,HKG,BKK,KIX,NRT,PVG - ??
    - SFO,IAD,LAX,BHX,FRA,MXP,FCO,MAD,ARN,CPH,ICN,MEL,SYD- ??

    Real Estate
    - Mumbai - Nariman Point - $300M
    - Central Mumbai - 32 acres
    - Mumbai Airport land - ??
    - New Delhi - Vasant Vihar - 30 acres where a Three Bed Room Apartment costs $750,000
    - New Delhi - 9 x 1900 sq.ft Apartments in Asiad Village
    - New Delhi - 16,188 sq mt of premises at Baba Kharak Singh Marg
    - Chennai - 19.13 acres
    - Hyderabad - 20 acres
    - Office Space/Apartments/Villas in London, Hong Kong, Nairobi, Japan, and Mauritius - $1B
    - Centaur Hotels - ??

    Human Resources (When GoI dumped 68WBs on AI's lap without plan, It was forced to hire and train crew, reason for most of its working capital debt)
    - 1200 Pilots
    - 1000 Engineers
    - 2500 Cabin Crew

    Art Collection -
    Star Alliance Membership - $200 M (Membership fee and infrastructure investments)
    SITA Group stake
    Air Mauritius - 8%
     
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    lightsaber
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sun Jul 30, 2017 6:01 pm

    How can AI be brought to break even? Most airlines need to spend 6% to 8% of revenue above operating expenses to break even. e.g., pay for the headquarters staff, advertising, and other corporate overhead. I've yet to see the plan to get to break even.

    Are the losses really under-reported?
    http://www.firstpost.com/business/decod ... 29436.html

    How long can AI operate without subsidies? They need to be privatized and soon.
    IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
     
    devmapper
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sun Jul 30, 2017 10:25 pm

    Antarius wrote:
    The nonstops are best for O&D traffic. AI would be better off going to a multi hub approach, such as BLR-SFO nonstop to try to grab as much O&D traffic as possible and eliminate the connections. As it stands, no one (maybe except for anshabhi and his ilk) would willingly choose AI over the ME3 for a 1 stop flight.

    Where's the proof that a direct SFO-BLR will be a profitable route for any airline, let alone AI, without the network effects of a hub? O&D BLR-SFO cannot sustain a 6 times weekly flight, and AI does not have flights and domestic engineering resources (or the money) to create a new hub in BLR. As for BLR's potential as a hub, we've seen how well it did for IT.
     
    devmapper
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    Re: Would an AI IndiGo merger produce a global Giant?

    Sun Jul 30, 2017 10:42 pm

    CaliguyNYC wrote:
    Couple of things in response to posts above:
    2) How is BOM bleeding AI dry? No one in BOM cares that AI launches nonstop flights to the US from DEL (never seen an article complaining or even posts on this site). Its only people from the South that complain. BOM employees rightly kept their jobs when AI moved their HQ to DEL. But an airlines HQ doesn't affect where crews need to be. Plus as people retire, they are hired in DEL or where ever AI wants them based.


    If you think no one complains about AI's hub focus on Delhi, you haven't been on ANet long enough. People from BLR think AI should only have NA non-stops from BLR, people from HYD think AI should only have NA non-stops from HYD and so on for MAA, I am surprised that there hasn't been demand for non-stop CJB/COK/TRV-North America flights on AI.

    W.r.t. BOM operations hurting AI, AI has to dead-head crew from BOM to DEL for its flights, That takes away revenue seats from what might be AI's only profit-making domestic route. Also, the BOM-EWR flight has been consistently loss making of AI's NA routes. Unfortunately, AI unions (controlled by a state-level nationalistic party) is likely to bring AIs operations to a standstill if AI draws down BOM operations to a focus-city level.

    Here's the funny thing about AI. If it was profitable, I am sure people would be complaining about why AI doesn't operate sub-$1k non-stop charter flights for people direct from IXE to SMF.
     
    CaliguyNYC
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 1:40 am

    Antarius wrote:
    CaliguyNYC wrote:
    3) AI serves the South. It has always flown to SIN, KUL, CMB & the Gulf from the South which was the main destinations for decades. It is only recently you have a critical mass of Southerns in NA. Right now, AI's hub absolutely has flights to the south that confidently connect to their EU and US nonstops. That is serving the South in the same way the ME3 do (meaning one stop connections with 3 hours or less connecting time). That's the definition of a hub network carrier. AI's SFO flight continues to BLR, ORD/IAD to HYD. Plus all the Gulf flights. So how does Ai not serve the South? And BOM and DEL are very convient connecting airports as they are small and with options if you misconnect. The issues that were in the old airports really aren't relevant anymore. It's so confusing why people keep bringing up the old airport on an avaiation enthusiast forum (meaning you have got to know that BOM and DEL have new airports).


    The issue is, why would you choose to fly SFO-DEL-south india when you could fly SFO-DXB-south india? On every count, EK beats AI, from hard product, to soft product, to timeliness, to connecting airport quality etc.

    The nonstops are best for O&D traffic. AI would be better off going to a multi hub approach, such as BLR-SFO nonstop to try to grab as much O&D traffic as possible and eliminate the connections. As it stands, no one (maybe except for anshabhi and his ilk) would willingly choose AI over the ME3 for a 1 stop flight.


    Plenty of people chose to fly one stop via AI to the US. HYD is a great example not to mention (1) all the cities not served by the ME3 (2) people who are Star alliance FFs and (3) people who are more comfortable flying an Indian airline. There is a big between some people not wanting to fly them to there is no business model for one stop flights to the US because of the ME3. The best thing AI ever did is move its hub to DEL. I really give them credit to sticking to that approach. OUtside of BOM, DEL and partly BLR, Indian cities lack the premium demand for nonstop long hauls except to hubs and a few places (maybe LHR and ME/SEA which are not LHs). Let's focus on making the DEL hub experience better (although no one ever really says any facts from the last two years really).

    To the other poster - I had said that BOM people don't complain about AI no longer having BOM a hub. I think AI serves strong O&D routes out of BOM (and other cities in India) which is the right way. It's only really people in the South who complain like its some conspiracy fully ignoring all of North India really has to use DEL (AMD and ATQ people used to complain a lot in the 90s and early 2000's about lack of AI flights, bit I think they have realized the premium market isn't there to support long haul p2p).
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 11:05 am

    There is nothing wrong in keeping BOM as a focus city or as temporary WB crew base until enough employees retire.

    Both AI and 9W seems to do better on the India-LHR premium market, including Mumbai, but ME3 PR want people to believe all premium passengers are taking one-stop options.

    My comment on Mumbai was about its (mainly media) role in tarnishing AI's image.

    It is hilarious to claim connections at DXB, AUH or DOH are better than DEL. Totally ignorant comment.

    BLR-SFO non-stop would have been an epic failure, and another loss making route.
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 4:32 pm

    #1 Issue: Debt servicing fees of $935 Million per year (Per latest filing with Indian Parliament, worst than earlier estimates of $600M-$700M)

    Compare that to $230 Million staff cost (including retirees) and less than $600 M ATF cost.

    Probably AI is the only airline in the world with debt servicing fees higher than ATF.
     
    VolvoBus
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 6:21 pm

    dtw2hyd wrote:
    #1 Issue: Debt servicing fees of $935 Million per year (Per latest filing with Indian Parliament, worst than earlier estimates of $600M-$700M)

    Compare that to $230 Million staff cost (including retirees) and less than $600 M ATF cost.

    Probably AI is the only airline in the world with debt servicing fees higher than ATF.


    While I assume your comment re debt servicing relates to the sheer size of it, it also raises another problem. As it is roughly 50% higher than earlier estimates ,it implies increased debts of a similar magnitude, as there has been no major hike in international interest rates. If the first estimates were so spectacularly wrong, does AI have any credibility regarding future requirements ,projections or plans ?
     
    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 6:57 pm

    Total debt is $8B
    Aircraft related $3B (We know the rates are somewhere between 4%-5%)
    Working Capital $5B ($1B from global, $4B from Indian PSU Banks)

    AI is paying $935 Million interest on $8B debt. You do the math.

    The only additional borrowing is $155M for 3xVVIP B773s this year and $325M next year.

    Last 4xB788s are pretty much free.
     
    vadodara
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 7:24 pm

    CaliguyNYC wrote:
    To the other poster - I had said that BOM people don't complain about AI no longer having BOM a hub. I think AI serves strong O&D routes out of BOM (and other cities in India) which is the right way. It's only really people in the South who complain like its some conspiracy fully ignoring all of North India really has to use DEL (AMD and ATQ people used to complain a lot in the 90s and early 2000's about lack of AI flights, bit I think they have realized the premium market isn't there to support long haul p2p).


    AMD plus surrounding areas are thankful that the ME3 are serving AMD. Good that BOM people dont complain anymore; perhaps they should ask their local govt. why the airport has come to such a sorry pass.
     
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    lightsaber
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 7:52 pm

    dtw2hyd wrote:
    Total debt is $8B
    Aircraft related $3B (We know the rates are somewhere between 4%-5%)
    Working Capital $5B ($1B from global, $4B from Indian PSU Banks)

    AI is paying $935 Million interest on $8B debt. You do the math.

    The only additional borrowing is $155M for 3xVVIP B773s this year and $325M next year.

    Last 4xB788s are pretty much free.

    Then cleave off the loans to an entity than has the resources to refinance.

    But even with a normal debt load, break even us operating costs +8% or more. Healthy airlines make 22% off operations and then 12% net profit. I just do not see the numbers where another airline could bring AI up to the point it could survive the next recession. Eventually there will be one.

    Personally, I do not take Indigo's bid seriously. They put on enough conditions to make their offer unlikely. That leaves Tata and QR. I cannot see either taking AI with the current debt without a restructuring pre-purchase. Any buyer had better realize Alitalia was easier to return to profit and look at how much EY list on them.

    What is the daily burn rate of money for Air India? It has to be $2 million per day. Restructuring the debt would reduce that to $1 million. With all the other airlines growing profitably in the Indian domestic market, how will they thrive.

    An earlier post noted that EK, but holding their allowed seats, is now #3 in India with AI #2.

    Once the new bearings and combustors are put in Indigo's NEIs, they'll be primed for International expansion. After looking at AI's books, they'll know where to go.

    Lightsaber
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    dtw2hyd
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 8:10 pm

    lightsaber wrote:
    It has to be $2 million per day. Restructuring the debt would reduce that to $1 million. With all the other airlines growing profitably in the Indian domestic market, how will they thrive.

    Indian banks have $180B bad loans. By latest numbers, they are earning close to $700M/year on $4B loan to AI. Why would they restructure AI debt. Their survival at stake.

    lightsaber wrote:
    Personally, I do not take Indigo's bid seriously. They put on enough conditions to make their offer unlikely. That leaves Tata and QR. I cannot see either taking AI with the current debt without a restructuring pre-purchase. Any buyer had better realize Alitalia was easier to return to profit and look at how much EY list on them..


    AI has more than $5B non-aviation assets, given someone who knows to monetize. Also Indian PSU bank hold lien on most of its assets for peanuts.

    Tatas, SIA, and AirAsia so far didn't prove themselves to be successful airline managers. Tony on record saying Indian aviation is a tough nut to crack.

    6E inducts an A320 every 9 days. AI inducted 14 CEOs in 3+ months and another 14 NEOs in 3-4 months. For Vistara it took 3 years to induct 14 planes.

    AI beats 9W and 6E in employee to plane ratio and employee revenue per ASK.
     
    vadodara
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    Re: Would an AI IndiGo merger produce a global Giant?

    Mon Jul 31, 2017 10:33 pm

    lightsaber wrote:
    Then cleave off the loans to an entity than has the resources to refinance.

    But even with a normal debt load, break even us operating costs +8% or more. Healthy airlines make 22% off operations and then 12% net profit. I just do not see the numbers where another airline could bring AI up to the point it could survive the next recession. Eventually there will be one.


    Likely scenario; cleave off enough of the loans using non-aviation assets to make it attractive to an airline. Needless to say, it will attract charges of political favouritism but so be it.

    lightsaber wrote:
    Personally, I do not take Indigo's bid seriously. They put on enough conditions to make their offer unlikely. That leaves Tata and QR. I cannot see either taking AI with the current debt without a restructuring pre-purchase. Any buyer had better realize Alitalia was easier to return to profit and look at how much EY list on them.
    .....
    Once the new bearings and combustors are put in Indigo's NEIs, they'll be primed for International expansion. After looking at AI's books, they'll know where to go.

    Lightsaber


    Why not? Indigo has come and said that AI offers attractive routes/slots. Why not make a bid for it? I do agree that once the Neo's start revving up, they will be able to crank it up. However, even airports like DXB are hard to open-up. Much better to look at Air India if some of the baggage can be jettisoned.

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