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readytotaxi
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Air India - Government to sell 100% stake.

Mon Jan 27, 2020 10:22 am

https://www.bbc.co.uk/news/world-asia-india-51260989

"The Indian government's announcement that it will sell its entire stake in its national carrier, Air India, is being seen as a much more exciting proposition for potential buyers.A document, inviting expressions of interest, was released on Monday. "

"But bidders will be expected to take on debt only to the tune of $3.26 billion according to the new terms. It is not yet clear what the government will do with the remaining debt."

Well who ever is brave/daft enought to take this on must really have deep pockets and a VERY long term view, and then there is the workforce with their Alitalia mentality. So who is it gonna be. :stirthepot:
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piedmontf284000
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 10:27 am

18 months ago, the government proposed to offload 76 per cent equity share capital of AI as well as transfer the management control to private players. However, there were no bidders. I imagine the same scenario will play out again. Way too much risk for any investor to take on, unless you literally like to see your money burn and do not care about heavy loses.
 
Breathe
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 11:11 am

piedmontf284000 wrote:
Way too much risk for any investor to take on, unless you literally like to see your money burn and do not care about heavy loses.

Etihad? :duck:
 
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zeke
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 11:39 am

readytotaxi wrote:
Well who ever is brave/daft enought to take this on must really have deep pockets and a VERY long term view, and then there is the workforce with their Alitalia mentality. So who is it gonna be. :stirthepot:



Looking at their last annual report, they had a revenue of US$3.697 billion, there seemed to be some scope for savings in my view in the aircraft leasing and repairs line items.

It’s a huge domestic market, with liberal international air service agreements.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
dtw2hyd
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 11:45 am

readytotaxi wrote:
The Indian government's announcement that it will sell its entire stake in its national carrier, Air India


That is very subjective. It is still keeping Alliance Air, and moving VVIP aircraft to that unit.
Engineering, loss making GHA and Hotel businesses also will remain tax payer owned.
Interesting tidbit, all 15 x 777s are paid off, and buyer will get 15 paid off WBs.

So Indian tax payer will keep all the debt and loss making units, cleaned up units will be given away to ...
All posts are just opinions.
 
DIJKKIJK
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 12:22 pm

$3.26 billion is still a humongous debt. Don't forget that Jet Airways had less than that and still went under with no takers. And there's still that ridiculous government of India rule that foreign stakeholders can't own more than 49%. The only suitors with potential, the Tatas, are grappling with the loss-making Vistara and are no longer interested in AI.
Apparently the Hindujas have been making noises about acquiring Jet Airways. Maybe they should look at AI instead, which is still a functional airline.
Last edited by DIJKKIJK on Mon Jan 27, 2020 12:38 pm, edited 1 time in total.
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readytotaxi
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 12:51 pm

DIJKKIJK wrote:
$3.26 billion is still a humongous debt. Don't forget that Jet Airways had less than that and still went under with no takers. And there's still that ridiculous government of India rule that foreign stakeholders can't own more than 49%. The only suitors with potential, the Tatas, are grappling with the loss-making Vistara and are no longer interested in AI.
Apparently the Hindujas have been making noises about acquiring Jet Airways. Maybe they should look at AI instead, which is still a functional airline.

You would have thought with the government so desperate to off load AI they would relax/amend the 49% rule.
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Scotron12
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 1:11 pm

zeke wrote:
readytotaxi wrote:
Well who ever is brave/daft enought to take this on must really have deep pockets and a VERY long term view, and then there is the workforce with their Alitalia mentality. So who is it gonna be. :stirthepot:



Looking at their last annual report, they had a revenue of US$3.697 billion, there seemed to be some scope for savings in my view in the aircraft leasing and repairs line items.

It’s a huge domestic market, with liberal international air service agreements.


Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?
 
dtw2hyd
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 1:26 pm

Scotron12 wrote:
...
Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?


Most likely GoI will sell it for a $1 and GoI buys back for $5 Billion in future,not a bad deal. BTW, crony governments never snatch from friends, always dole out sops.
All posts are just opinions.
 
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zeke
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 1:28 pm

Scotron12 wrote:
Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?


The courts ?
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
blueflyer
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 3:46 pm

Even though the government is willing to offload most of the debt from the airline's book, the potentially disastrous labor relations are enough to scare off many would-be buyers. Before selling, the government should cleanse the payroll, a very difficult and unpopular task for an airline used as much for political patronage as for transporting people between points on a map.
 
Noshow
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 3:59 pm

So a buyer would need to reform it. That could include staff reductions.
Wouldn't it be more promising to restructure it first and then sell it as good to go and without debt?
 
Scotron12
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 4:08 pm

Noshow wrote:
So a buyer would need to reform it. That could include staff reductions.
Wouldn't it be more promising to restructure it first and then sell it as good to go and without debt?


I see parallels with AZ. .pretty same situation. If the Indian government is serious...then kudos to them. But I agree...as with AZ...getting rid or reducing current staff would be a headache.. one that rival politicians would try exploit.
 
Sokes
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 4:48 pm

Scotron12 wrote:
Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?


The government wants more private enterprise. Many government owned banks that had losses through an excess of non performing credit were not allowed to expand credit volumes for some years. Similar in aviation growth went mostly to private players. I don't know if Air India didn't grow at all or less than private players, but the relative importance of the public sector is shrinking. It is also planned to allow private trains. Again public sector's relative importance will shrink.
It's a policy of small steps. In a growing economy with growing population it's enough to shrink the public workforce with the help of retirement. I am not sure if this was done in most public enterprises, but I believe to remember that I read it was done in some.
There is nothing fishy about the privatization effort..
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Spiderguy252
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 8:04 pm

Deja Vu Max.
Vahroone
 
art
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 8:24 pm

Noshow wrote:
So a buyer would need to reform it. That could include staff reductions.
Wouldn't it be more promising to restructure it first and then sell it as good to go and without debt?


Does the government have (a) the guts (b) the competence do do that? I am extremely sceptical it has either, having followed the indigenous LCA fighter project, the management of which has been a joke.
 
TObound
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Re: Air India - Government to sell 100% stake.

Mon Jan 27, 2020 10:03 pm

Who would trust the GoI not to interfere in a privatized Air India? Would politicians keep demanding their AI perks? Would the government pressure owners to give in to staff demands? So much risk....
 
dtw2hyd
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 1:13 am

TObound wrote:
Who would trust the GoI not to interfere in a privatized Air India? Would politicians keep demanding their AI perks? Would the government pressure owners to give in to staff demands? So much risk....


Done and done. Welcome to Alliance Air a 100% Government of India Enterprise continue to leech on tax payer funds.

GoI is not getting out of airline business, it is keeping
1) Loss making airline, (Alliance Air)
2) MRO (AIESL)
3) Loss making GHA (AIATSL)
4) Loss making Hotels (HCI)
5) $10B debt from old Air India,

All all tax payer funded

Cleaned up AI, most efficient LCC(AIX) and most profitable GHA( AI-SATS) are being given away.
All posts are just opinions.
 
vadodara
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 2:17 am

zeke wrote:
Scotron12 wrote:
Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?


The courts ?


It got nationalized for lot of reasons, moving ops from BOM to DEL. The current govt does not have the appetite to run companies nor is squeamish to use dedicated aircraft for its own purposes.

All told It is comfortable in running AI as a for profit corporation .
 
edealinfo
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 3:14 am

dtw2hyd wrote:
TObound wrote:
Who would trust the GoI not to interfere in a privatized Air India? Would politicians keep demanding their AI perks? Would the government pressure owners to give in to staff demands? So much risk....


Done and done. Welcome to Alliance Air a 100% Government of India Enterprise continue to leech on tax payer funds.

GoI is not getting out of airline business, it is keeping
1) Loss making airline, (Alliance Air)
2) MRO (AIESL)
3) Loss making GHA (AIATSL)
4) Loss making Hotels (HCI)
5) $10B debt from old Air India,

All all tax payer funded

Cleaned up AI, most efficient LCC(AIX) and most profitable GHA( AI-SATS) are being given away.

Even if this is privatization of the profits and socialism of the losses, I say the former should go ahead with a sale to the private sector on the theory that:
a) At least someone, i.e., the private sector, will make better use of the assets.

b) The tough line Government, may, in time, cut off funding for the latter, allowing it to close.

I salute the Government for at least taking the initiative. The previous Govt didn't have the kahunas to change the status quo
 
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BawliBooch
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 3:24 am

dtw2hyd wrote:
That is very subjective. It is still keeping Alliance Air, and moving VVIP aircraft to that unit.
Engineering, loss making GHA and Hotel businesses also will remain tax payer owned.
Interesting tidbit, all 15 x 777s are paid off, and buyer will get 15 paid off WBs.

So Indian tax payer will keep all the debt and loss making units, cleaned up units will be given away to ...


Oh but a private sector player, most probably a crony, will get their grubby hands on prized slots, paid for fleet and so on for a fraction of their real value. Need to find out how much electoral bonds will have to be purchased in exchange for Air India! :P

PS: Also looking forward to see what Subbu will do now! This is a golden opportunity for the Govt to cut Subbu to size. But will they?
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Antarius
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 3:42 am

BawliBooch wrote:
dtw2hyd wrote:
That is very subjective. It is still keeping Alliance Air, and moving VVIP aircraft to that unit.
Engineering, loss making GHA and Hotel businesses also will remain tax payer owned.
Interesting tidbit, all 15 x 777s are paid off, and buyer will get 15 paid off WBs.

So Indian tax payer will keep all the debt and loss making units, cleaned up units will be given away to ...


Oh but a private sector player, most probably a crony, will get their grubby hands on prized slots, paid for fleet and so on for a fraction of their real value. Need to find out how much electoral bonds will have to be purchased in exchange for Air India! :P

PS: Also looking forward to see what Subbu will do now! This is a golden opportunity for the Govt to cut Subbu to size. But will they?


Even if all this is true, it will cost less for the government than continuing to run Air India. Sunk cost fallacy and all that is the only reason people keep pumping money into the airline.

Give it away to a crony or not. It stops the unmitigated bleeding.
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dtw2hyd
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 3:47 am

edealinfo wrote:
Even if this is privatization of the profits and socialism of the losses, I say the former should go ahead with a sale to the private sector on the theory that:
a) At least someone, i.e., the private sector, will make better use of the assets.

b) The tough line Government, may, in time, cut off funding for the latter, allowing it to close.


So how is GoI going to service and payoff $10Billion debt on AI(R),AIESL,AIATSL,HCI income and pay lease on 3x77Ws and maintain VVIP ops. At 13%(reasonable rate in India) APR $1.3 Billion plus budgetary support to these units close to say another $200 Million.

Is there $1.5 Billion surplus in the federal budget. In any case tax payers are going to bleed forever.
All posts are just opinions.
 
anshabhi
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:03 am

Sokes wrote:
Scotron12 wrote:
Even if someone did take AI and a few years down the line AI is a roaring success, what would stop the government taking it back?


The government wants more private enterprise. Many government owned banks that had losses through an excess of non performing credit were not allowed to expand credit volumes for some years. Similar in aviation growth went mostly to private players. I don't know if Air India didn't grow at all or less than private players, but the relative importance of the public sector is shrinking. It is also planned to allow private trains. Again public sector's relative importance will shrink.
It's a policy of small steps. In a growing economy with growing population it's enough to shrink the public workforce with the help of retirement. I am not sure if this was done in most public enterprises, but I believe to remember that I read it was done in some.
There is nothing fishy about the privatization effort..


Everything about privatization is welcomed. 90% public sector organizations are very inefficient and bleeding in every way - monetarily, lack of innovation etc.

Also, public sector in India suffers from reservation. Private sector can hire the best people, without worrying about anything else.
 
edealinfo
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:08 am

BawliBooch wrote:
dtw2hyd wrote:
That is very subjective. It is still keeping Alliance Air, and moving VVIP aircraft to that unit.
Engineering, loss making GHA and Hotel businesses also will remain tax payer owned.
Interesting tidbit, all 15 x 777s are paid off, and buyer will get 15 paid off WBs.

So Indian tax payer will keep all the debt and loss making units, cleaned up units will be given away to ...


Oh but a private sector player, most probably a crony, will get their grubby hands on prized slots, paid for fleet and so on for a fraction of their real value. Need to find out how much electoral bonds will have to be purchased in exchange for Air India! :P

PS: Also looking forward to see what Subbu will do now! This is a golden opportunity for the Govt to cut Subbu to size. But will they?


Subbu as in Subramanium Swamy? He has vowed to defend the Air India worker and "save" Air India from privatization. This is a contrary position to that of the Government. It makes for interesting politics.
 
edealinfo
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:10 am

dtw2hyd wrote:
edealinfo wrote:
Even if this is privatization of the profits and socialism of the losses, I say the former should go ahead with a sale to the private sector on the theory that:
a) At least someone, i.e., the private sector, will make better use of the assets.

b) The tough line Government, may, in time, cut off funding for the latter, allowing it to close.


So how is GoI going to service and payoff $10Billion debt on AI(R),AIESL,AIATSL,HCI income and pay lease on 3x77Ws and maintain VVIP ops. At 13%(reasonable rate in India) APR $1.3 Billion plus budgetary support to these units close to say another $200 Million.

Is there $1.5 Billion surplus in the federal budget. In any case tax payers are going to bleed forever.


I assume the Government (in time, i.e., after 1 year) will just allow this part to fail, like Jet, then transfer the VVIP aircraft to the military. Then it can wash its hands on a job well done, and executed, in Amit Shah style. Basically, he is a steam-roller and won't let anything get in his way. It will be interesting to see how he deals with Subbu. Who will back down? or will it be a Mahabaratha?
 
dtw2hyd
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:28 am

edealinfo wrote:
I assume the Government (in time, i.e., after 1 year) will just allow this part to fail, like Jet,


Would you please explain this in money/finance/accounting/debt/credit terms. It is not that you wave a wand and $10B sovereign debt disappears. Wave that wand now.
(BTW, where did I get this $10B number, PIM puts total debt at 97,000 Cr with 23,000 transferred to buyer, leaves 74,000 Cr debt for tax payers)

edealinfo wrote:
It will be interesting to see how he deals with Subbu. Who will back down? or will it be a Mahabaratha?


Don't know what is the deal with SSwamy, his tantrum could be part of a bigger plot, but it appears union leaders are tamed. Never underestimate ModiShah.
All posts are just opinions.
 
Antarius
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:47 am

dtw2hyd wrote:
Don't know what is the deal with SSwamy, his tantrum could be part of a bigger plot, but it appears union leaders are tamed. Never underestimate ModiShah.


When it doubt, pretend it's a giant conspiracy theory. hell with evidence, but there's something sinister.

Maybe AI exists to spray the populace with mind controlling chemtrails.... I have no evidence, but that hasn't stopped anyone here, has it?
Last edited by Antarius on Tue Jan 28, 2020 4:49 am, edited 1 time in total.
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flybhx764
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 4:48 am

If this airline sells then they can make good improvements. Air India has cancelled so many flights and not refunded my money back yet reply to any email. Would never fly them again
 
sibibom
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 6:08 am

With the economy stalling (mostly self-inflicted) the government NEEDS big-budget reforms and privatization is a major part of it. They will do everything to get rid of Air India.

If anyone has followed what's happening with MNTL/BSNL(state-owned telecom companies) will know they will go the distance. The majority (60%) of the employees are going to retire end of the month with a very generous Voluntary Retirement Scheme (VRS).

Let's see what they do to Air India on 1st February (Union Budget)....
 
strfyr51
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 6:44 am

So? I have a question. Aside from India? Is there anything wrong with AI that couldn't be fixed with new Management? Id the Indian Government got out of the way?
Could anybody put in the cuts needed to turn the airline around? I've heard all the excuses, Nepotism Etc. But is the Air India staff on solid footing needing good leadership?
OR? Is this a sinking ship that needs the plug Pulled?
 
DIJKKIJK
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 8:47 am

edealinfo wrote:
BawliBooch wrote:
dtw2hyd wrote:
That is very subjective. It is still keeping Alliance Air, and moving VVIP aircraft to that unit.
Engineering, loss making GHA and Hotel businesses also will remain tax payer owned.
Interesting tidbit, all 15 x 777s are paid off, and buyer will get 15 paid off WBs.

So Indian tax payer will keep all the debt and loss making units, cleaned up units will be given away to ...


Oh but a private sector player, most probably a crony, will get their grubby hands on prized slots, paid for fleet and so on for a fraction of their real value. Need to find out how much electoral bonds will have to be purchased in exchange for Air India! :P

PS: Also looking forward to see what Subbu will do now! This is a golden opportunity for the Govt to cut Subbu to size. But will they?


Subbu as in Subramanium Swamy? He has vowed to defend the Air India worker and "save" Air India from privatization. This is a contrary position to that of the Government. It makes for interesting politics.


Subbu is the official Clown of India. Sad but true.
He made great claims about having enough evidence to send the Gandhi family to jail in the 3G/4G scam, only for the Supreme court to acquit everyone. What a joker!
Never argue with idiots. They will bring you down to their level, and beat you with experience.
 
oceanvikram
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 9:47 am

I wonder whether the government of India is willing to accept used toilet paper? If so, I'd be happy to make a bid for AI.
I wonder whether the government of South Africa is willing to accept used toilet paper? If so, I'd be happy to make a bid for SAA.
I wonder whether the government of Italy is willing to accept used toilet paper? If so, I'd be happy to make a bid for AZ.
I wonder whether the government of Venezuela is willing to accept used toilet paper? If so, I'd be happy to make a bid for Conviasa.
I wonder whether the government of Nigeria is willing to accept used toilet paper? If so, I'd be happy to create an airline there.

If I am successful, I might even create an alliance ...
My comments are based as an aviation enthusiast first, then as a passenger who paid for his own ticket, after that a passenger on a business trip and finally an armchair CEO.
 
dtw2hyd
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 11:44 am

strfyr51 wrote:
So? I have a question. Aside from India? Is there anything wrong with AI that couldn't be fixed with new Management? Id the Indian Government got out of the way?
Could anybody put in the cuts needed to turn the airline around? I've heard all the excuses, Nepotism Etc. But is the Air India staff on solid footing needing good leadership?
OR? Is this a sinking ship that needs the plug Pulled?


With this transaction (I wouldn't call it privatization or divestment, because it is neither) Government ownership and management ends, but state owned banks still control the fate. Any airline can be met with Jet's fate. As Minister of Civil Aviation says, they can take downfall of one or more airlines with stride.
Someone explained there are only two types of airlines in India, one directly state owned, ie., AI, rest indirectly state owned thru PSBs. There are no private carriers per say in India.

Basically GoI splitting it into two companies, AI(Friends) Ltd, AI(Tax Payers) Ltd.. Color coded based on risk level.

AI (Friends)
$3 Billion annual revenue
$3 Billion Debt obligations (future lease payment obligations)

50% of AI-SATS - 300?? Cr profit (rest 300 Cr profit goes to Singapore)
15 paid off 777s
8 paid off A319s
11 paid off A321s


1 owned 777
6 owned 788s(I am guessing owned=financed.)
4 owned A320CEOs
11 owned A319s
10 owned A321s


21 SLB 788s (lease returns start in 2024)

6,300 Permanent Employees (9,000 offered, 2,700 AIATSL employees can be negotiated to remain with AI(Tax Payers))
Contract employees can be terminated any time.

All the Friend has to do is pay leases and salaries with $3 Billion revenue, I bet one could make a profit first quarter.

AI(Tax Payers)
$10B Debt
10? x ATRs on dry lease
4 x 744s (worth $1 each, not a typo)
2 x77Ws ($600 Million debt)
AIESL - 6000 employees
AIATSL - Bulk of AI group employees
All posts are just opinions.
 
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BawliBooch
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 1:54 pm

dtw2hyd wrote:

All true!

Sad to see this but the end is inevitable now! Like with a dozen other Institutions of Modern India, Air India too will now be consigned to the graveyard of history. Taken apart piece by piece and sold off by the crony who gets his hands on the goodies. The taxpayer will be left holding the bill anyway! :(

People have short memories! There was a time, when on this very forum, people were cheering for Kingfisher as the ultimate game in town. There are trip reports gushing about how "Kingfisher shows us what India can do when left alone by the govt". And so on. Atleast 2 reports where people made a case that AI should be handed over to Vijay Mallya. We all know how KF ended up! Ofcourse no one remembers because they have short memories! :)

Today the latest star in the sky is Indigo - an airline with deep PR budgets to whitewash their pathetic work culture, poor maintenance and safety records and so on! Split off Air India's assets into bite sized pieces and sell them off to Indigo/SpiceJet, Dhoot and Adani.

Why does India even need a home airline? ME3 is doing such a fine job anyway! Its a luxury that a bankrupt India can no longer afford! India's unemployment, GDP figures are at a 45 year low. Debt servicing is now going to be an issue in a years time. But who cares! Lets have a party now!
Mr.Kapoor's favorite poodle!
 
Sokes
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Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 3:02 pm

dtw2hyd wrote:
With this transaction (I wouldn't call it privatization or divestment, because it is neither) Government ownership and management ends, but state owned banks still control the fate.


Is there a law which will ban a private Air India to approach private banks?
You say government ownership ends, but you won't call it privatization. How would you call it?
Why can't the world be a little bit more autistic?
 
TObound
Posts: 772
Joined: Mon May 27, 2019 12:54 am

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 6:48 pm

dtw2hyd wrote:
TObound wrote:
Who would trust the GoI not to interfere in a privatized Air India? Would politicians keep demanding their AI perks? Would the government pressure owners to give in to staff demands? So much risk....


Done and done. Welcome to Alliance Air a 100% Government of India Enterprise continue to leech on tax payer funds.

GoI is not getting out of airline business, it is keeping
1) Loss making airline, (Alliance Air)
2) MRO (AIESL)
3) Loss making GHA (AIATSL)
4) Loss making Hotels (HCI)
5) $10B debt from old Air India,

All all tax payer funded

Cleaned up AI, most efficient LCC(AIX) and most profitable GHA( AI-SATS) are being given away.


Sure. But none of that means they won't get involved when push comes to shove to "protect" those employees. I mean, we see stuff like that in developed countries, so why not India?

Imagine a scenario where a new owner buys AI. They decided to refocus it as India's best network carrier. To do that, hubs have to be positioned in cities/metros with the highest GDP and the highest demand for travel. Would the government let them do what they want? I would imagine any re-structuring would mean concentrating all crew, maintenance and support at 2-3 hubs and turn focus cities into exactly that: cities which receive regular service from the hubs. Would they, for example, allow the new owner to scale down at MAA and ramp up at BLR if they wanted? How would government (central and state) react to movements of jobs like that?

This is what I'm sure a lot of potential owners are wondering too.....
 
dtw2hyd
Posts: 8236
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 7:39 pm

TObound wrote:
Sure. But none of that means they won't get involved when push comes to shove to "protect" those employees. I mean, we see stuff like that in developed countries, so why not India?

Imagine a scenario where a new owner buys AI. They decided to refocus it as India's best network carrier. To do that, hubs have to be positioned in cities/metros with the highest GDP and the highest demand for travel. Would the government let them do what they want? I would imagine any re-structuring would mean concentrating all crew, maintenance and support at 2-3 hubs and turn focus cities into exactly that: cities which receive regular service from the hubs. Would they, for example, allow the new owner to scale down at MAA and ramp up at BLR if they wanted? How would government (central and state) react to movements of jobs like that?

This is what I'm sure a lot of potential owners are wondering too.....


You might want to do some reading on current state of economy and who are the players in credit market rather than depending on views presented here.

What is the issue with current AI, its $3B annual revenue is not enough to payoff or service $10B debt. With current state of economy, India wouldn't be able to payoff or even service the debt.

If this was a developed country debt held by private banks, sure they can manage. GoI cannot write off $10B from public sector banks(PSBs) without bank system collapse.

Keep in mind Jet Airways was begging for $300 Million from same banks. Prior to 2015 SpiceJet was begging for $200 Million before magic happened.

The fear for buyers, if you are not in the good grace of powers, PSBs can cutoff your credit lines and you will end up like KF/SG(pre-2015)/9W.

All the evidence suggests things are not right, chanting suggests all is well.
All posts are just opinions.
 
TObound
Posts: 772
Joined: Mon May 27, 2019 12:54 am

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 7:51 pm

dtw2hyd wrote:
TObound wrote:
Sure. But none of that means they won't get involved when push comes to shove to "protect" those employees. I mean, we see stuff like that in developed countries, so why not India?

Imagine a scenario where a new owner buys AI. They decided to refocus it as India's best network carrier. To do that, hubs have to be positioned in cities/metros with the highest GDP and the highest demand for travel. Would the government let them do what they want? I would imagine any re-structuring would mean concentrating all crew, maintenance and support at 2-3 hubs and turn focus cities into exactly that: cities which receive regular service from the hubs. Would they, for example, allow the new owner to scale down at MAA and ramp up at BLR if they wanted? How would government (central and state) react to movements of jobs like that?

This is what I'm sure a lot of potential owners are wondering too.....


You might want to do some reading on current state of economy and who are the players in credit market rather than depending on views presented here.

What is the issue with current AI, its $3B annual revenue is not enough to payoff or service $10B debt. With current state of economy, India wouldn't be able to payoff or even service the debt.

If this was a developed country debt held by private banks, sure they can manage. GoI cannot write off $10B from public sector banks(PSBs) without bank system collapse.

Keep in mind Jet Airways was begging for $300 Million from same banks. Prior to 2015 SpiceJet was begging for $200 Million before magic happened.

The fear for buyers, if you are not in the good grace of powers, PSBs can cutoff your credit lines and you will end up like KF/SG(pre-2015)/9W.

All the evidence suggests things are not right, chanting suggests all is well.


Since the GoI is keeping the $10B in debt, a new owner presumably starts with a much better balance sheet. That should mean they have more working capital and need less credit. The question comes down to whether they will be truly unencumbered in implementing the business model they think they need to be successful. Nobody is going to bid unless they are sure of that.
 
dtw2hyd
Posts: 8236
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 9:04 pm

TObound wrote:
Since the GoI is keeping the $10B in debt, a new owner presumably starts with a much better balance sheet. That should mean they have more working capital and need less credit. The question comes down to whether they will be truly unencumbered in implementing the business model they think they need to be successful. Nobody is going to bid unless they are sure of that.


All greenfield airlines started with same enthusiasm and a clean balance sheet. Aviation is a capital heavy industry, in the West there are 100 ways to get a loan for an airline, in India there is only the PSB way. You need a finance partner who can guide you through tough times, Indian PSBs are always ready with the pillow when you are in trouble.

What is is the stated goal of privatization/divestment, it is not saving AI or its employees, it is to rescue tax payers from the blood sucking AI, that is not going to happen with $10B debt transferred to tax payer owned SPV. Pay off or servicing obligation is still with tax payer without revenue.

What is the need to privatize AI-SATS which brings 300 Cr every year without GoI lifting a finger. SATS(Singapore) is running the business and giving a check every year to AI/GoI.
All posts are just opinions.
 
TObound
Posts: 772
Joined: Mon May 27, 2019 12:54 am

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 10:01 pm

dtw2hyd wrote:
TObound wrote:
Since the GoI is keeping the $10B in debt, a new owner presumably starts with a much better balance sheet. That should mean they have more working capital and need less credit. The question comes down to whether they will be truly unencumbered in implementing the business model they think they need to be successful. Nobody is going to bid unless they are sure of that.


All greenfield airlines started with same enthusiasm and a clean balance sheet. Aviation is a capital heavy industry, in the West there are 100 ways to get a loan for an airline, in India there is only the PSB way. You need a finance partner who can guide you through tough times, Indian PSBs are always ready with the pillow when you are in trouble.

What is is the stated goal of privatization/divestment, it is not saving AI or its employees, it is to rescue tax payers from the blood sucking AI, that is not going to happen with $10B debt transferred to tax payer owned SPV. Pay off or servicing obligation is still with tax payer without revenue.

What is the need to privatize AI-SATS which brings 300 Cr every year without GoI lifting a finger. SATS(Singapore) is running the business and giving a check every year to AI/GoI.


If they are that limited, than nobody is going to bid to take over AI. That's my point.
 
dtw2hyd
Posts: 8236
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India - Government to sell 100% stake.

Tue Jan 28, 2020 11:41 pm

TObound wrote:
If they are that limited, .

That is the fact India has to accept and open-up financial system, but keep shutting down businesses also works and pride stays intact

TObound wrote:
than nobody is going to bid to take over AI. That's my point.

There is a 99.99% chance AI would be shut down. Not a bad option for tax payers, this jugglery only going to prolong the financial burden on tax payers. Keep in mind every private airline is a burden on public through public sector bank non-performing assets. Government can only consolidate and bundle thru bank mergers for so long, at some point depositors start losing money.
All posts are just opinions.
 
User avatar
BawliBooch
Posts: 1441
Joined: Mon Nov 28, 2016 4:24 am

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 2:45 am

Antarius wrote:
Any... Any proof of this? I'm expecting fatalities daily the way you portray this out to be.

Enough carte blanche to just keep spouting rubbish - statistics and proof or stop. The only ones here who fit the concept of PR work are you and dtw2hyd.


To cite one example - Indigo has been having SERIOUS problems with its A320NEO fleet. How many inflight shutdowns, diversions in the last few months? A simple google search will reveal the true extent of the rot within not just Indigo but Indian civil aviation on the whole. How many airlines around the world have been affected by P&W engine issues to the same extent? Why not?


India orders IndiGo to replace all Pratt engines on Airbus A320neo planes

The Indian DGCA has given Indigo multiple extensions to the deadline to replace the defective engines. The last such extension was granted on 11th January 2020 as the previous deadline of Dec 31's came and went. Meanwhile Indigo continues to operate their A320NEO's with known flaws putting 1000's of passengers at risk. The Indian regulatory framework, along with its enforcing arm the DGCA is deeply, deeply flawed.
DGCA extends IndiGo’s deadline to replace all unmodified Pratt & Whitney engines on A320neo

Like with the 737MAX, Are we going to have to wait for a serious accident to acknowledge we have a problem?

Point is- Civil Aviation in India is in deep crisis. And Indigo is part of the problem. Highlighting these flaws does not make someone a "PR agent" - but covering up these flaws is certainly within the bailiwick of a PR agent.

Selling off Air India's assets to a deeply flawed airline like Indigo for a song is not going to solve the problems but exacerbate them.

PS: Before asking others to prove something with "evidence", you must be ready to back up your own assertions with equally compelling evidence.
Mr.Kapoor's favorite poodle!
 
User avatar
BawliBooch
Posts: 1441
Joined: Mon Nov 28, 2016 4:24 am

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 2:55 am

Antarius wrote:
Even if all this is true, it will cost less for the government than continuing to run Air India.
:
:
It stops the unmitigated bleeding.


Amy evidence to prove that a $5/10billion debt writeoff, paid for by taxpayers will cost lesser? Air India is operationally profitable. It is the debt burden that is contributing to their poor finances. What is the logic behind writing off the debt, selling off the profitable parts of the business to rivals in pieces and retaining the loss making units? How is this going to "cost less" for the govt as compared to the other option of recapitalizing the Airline and retain ownership?

Like to see some hard numbers.
Mr.Kapoor's favorite poodle!
 
User avatar
BawliBooch
Posts: 1441
Joined: Mon Nov 28, 2016 4:24 am

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 3:35 am

Option 1: Sell off the assets and profitable parts of Air India to cronies, retain the unprofitable parts under govt ownership along with the $10b debt. Govt(Taxpayer) is left carrying the debt and has no ownership in what is left of the airline.

Option 2: Recapitalize the woefully under-capitalized but operationally profitable Air India enabling the airline to retire some of its crippling debt and return to full profitability in 2 quarters. In one year, go public and divest stock in tranches upto 49%. Across the second year, sell of the remaining 51% to a strategic investor like SQ/Vistara. Will cost the taxpayer much lesser and might even return a profit!

But hey! A struggling Air India works to benefit the private airlines who have 400 Airbuses on order!
Mr.Kapoor's favorite poodle!
 
User avatar
kitplane01
Posts: 1441
Joined: Thu Jun 16, 2016 5:58 am

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 3:48 am

The Indian government has announced a thousand plans like this, and NONE of them have happened.
Please reconsider taking this seriously.
It will not happen.
And if you are fooled yet again ... please stop being fooled.
Consider the source when listening ... and on Air India the government of India is just not a believable source.
 
142857
Posts: 20
Joined: Sun Jan 26, 2020 12:39 pm

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 10:41 am

I don't think Air-India is operationally profitable. They may show operational profit by holding back billions of rupees payable to Airport operators, fuel companies, etc -- guess we will have to wait for the official/audited figures to be released to know for sure
 
anshabhi
Posts: 2247
Joined: Thu Oct 20, 2016 10:40 am

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 11:58 am

BawliBooch wrote:
Antarius wrote:
Even if all this is true, it will cost less for the government than continuing to run Air India.
:
:
It stops the unmitigated bleeding.


Amy evidence to prove that a $5/10billion debt writeoff, paid for by taxpayers will cost lesser? Air India is operationally profitable. It is the debt burden that is contributing to their poor finances. What is the logic behind writing off the debt, selling off the profitable parts of the business to rivals in pieces and retaining the loss making units? How is this going to "cost less" for the govt as compared to the other option of recapitalizing the Airline and retain ownership?

Like to see some hard numbers.


Dude I was also an AI fanatic once upon a time. But atleast now open your eyes and realize that AI can never be SQ or EK under a sarkari environment.
 
edealinfo
Posts: 2678
Joined: Mon Jan 21, 2019 7:11 pm

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 1:56 pm

142857 wrote:
I don't think Air-India is operationally profitable. They may show operational profit by holding back billions of rupees payable to Airport operators, fuel companies, etc -- guess we will have to wait for the official/audited figures to be released to know for sure

Under an “accrual” system of accounting, as opposed to cash accounting, Air India is required to charge amounts it owes in any particular year, to the costs of that particular year. So, it would be reflected in their operational profits or losses for that year, not as you say, excluded.
 
edealinfo
Posts: 2678
Joined: Mon Jan 21, 2019 7:11 pm

Re: Air India - Government to sell 100% stake.

Wed Jan 29, 2020 1:58 pm

What has Subramanium Swamy not spoken up? Has he been neutered by the ModiShah combine. The scheming person that Subby is, he will likely have the last laugh later when he files all kinds of legal cases IF there is a successful bid.

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