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CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Fri Apr 02, 2021 12:04 pm

trinidadeG wrote:
CaliguyNYC wrote:

I think it is beyond just their slots. It is also their market share and the fact that they have routes that are up and running all over the world. It is a classic turn around case (that you have the believe you have the skills to run it better). Launching new routes cost a lot of money. With AI, you will have to spend some money to improve service, aircraft, connectivity etc. But the analysis the buyer is doing should show that it is much cheaper to make AI better than starting from scratch. This is typically why airlines all over the world buy loss making airlines. You shed the routes that have no hope, tweak the routes that you think can be money spinners and of course love the money making routes you have. Given AI’s current network, IMHO any buyer needs a strong partner in the US & EU. Improve the planes and service and get feed on the EU/US side and hopefully you have a viable airline.


Now Vistara seems to be looking at flying to the US by themselves also.

https://timesofindia.indiatimes.com/bus ... 842556.cms

Might end up in a scenario where the Tatas shrink Air India's network to only fly regional international, and leaves the long haul to Vistara?


Could be although two brands just seems so inefficient - better to have one staff and cross use of everything. I could see Vistara becoming an operator for Air India (in the way regional airlines like compass operate flights for DL,AA,UA). SQ knows if Tatas focus on AI, Vistara has no future. Plus neither SQ nor Tatas have been aggressive on growing Vistara so I question their commitment. Part of me thinks that Tatas game plan has always been AI. Vistara just got their feet wet while Indian politics played out. WRT to SQ, I think the issue with them, and Western airlines that have looked to invest in India, has been the weirdness of Indian aviation. Jet’s financials were never clear (meaning where the money was coming from). I think SQ wants to see how everything plays out. And to be honest, I think Tata wins the PR message by bidding on AI on their own. It looks to the Indian masses that one of the best Indian companies wants AI. Will seem Kosher to 80% of the pop. Then SQ can come in afterwards through a merger with Vistara on clean terms fully knowing the AI structure with the GOI etc. Remember SIN really doesn’t have that many growth opportunities. More and more traffic will go nonstop. SQ will always do well because of P2P and getting their loyalists. That all said, I think it would be great if SQ was involved int he new AI. BUT, I think AI needs EU/US partners for feed more than it needs SQ for ultra lux travel. SQ’s network wont really help AI. On service, iIf AI could reach the level of KLM (just with indian hospitality and food), I would dance in the aisles.
 
avier
Posts: 1237
Joined: Tue Aug 07, 2018 12:38 pm

Re: Air India Bidding

Fri Apr 02, 2021 2:45 pm

CaliguyNYC wrote:
trinidadeG wrote:

Now Vistara seems to be looking at flying to the US by themselves also.

https://timesofindia.indiatimes.com/bus ... 842556.cms

Might end up in a scenario where the Tatas shrink Air India's network to only fly regional international, and leaves the long haul to Vistara?


Could be although two brands just seems so inefficient - better to have one staff and cross use of everything.

I suspect AI will take the role and product offering of the present AIX i.e it would transform into a hybrid airline and serve labour traffic to the Gulf and smaller non-metro domestic cities. Both these markets wouldn't require a premium offering and a more basic product would be more suitable.
Vistara would cherry pick and take over all the premium domestic metro pairs and some larger tier2 cities, along with most of the high yielding long-haul markets.
AirAsia India would be folded into AI mostly.
So two brands actually would work better than having only one- as Vistara. Otherwise the Vistara brand would get diluted while trying to cater to all types of market. Regarding manpower, apart from the core crew, most others can easily be shared like ground staff, maintanence, the ones in administration etc.

CaliguyNYC wrote:
Part of me thinks that Tatas game plan has always been AI. Vistara just got their feet wet while Indian politics played out. WRT to SQ, I think the issue with them, and Western airlines that have looked to invest in India, has been the weirdness of Indian aviation. Jet’s financials were never clear (meaning where the money was coming from)

Jet was the master in such trickery. Infact, even now, their creditors and the RP overlooking the bankruptcy haven't yet figured out their links and dealings with their overseas firms all over the world. Some on here complain of Spice doing that, while forgetting Jet was the king of money laundering.
It's just that they had an amazing PR and marketing team, along with greasing the right palms, that they gave out a vibe that no one would question anything or care about what was happening behind the scenes at the airline. Maybe that's what enchanted foreign airlines to come invest in India, looking at the Jet glamour and popularity. DL probably later realised what was happening at Jet and so didn't bother then saving them.
Spice , on the other hand, actually is more like an open book and even a child can decode and complain about what they are doing.
 
User avatar
trinidadeG
Posts: 318
Joined: Tue Jun 30, 2009 7:43 am

Re: Air India Bidding

Thu Apr 08, 2021 3:05 am

alfa164 wrote:
Captaincurious wrote:
Tata Group and Spice Jet are announced as the final bidders of Air India. They are now allowed to access corporate information to make their final bids. https://simpleflying.com/tata-group-spicejet-air-india/


Was there ever any doubt that the politically-connected Ajay Singh's SpiceJet (he is reported to be the man behind Modi's ‘Now is the time for Modi government’ slogan in 2014) would be a winner? I suspect including Tata is just political theatre..


Now, it seems like the news of 'Ajay Singh and party' was just political theatre..

https://www.livemint.com/news/india/ras ... 76150.html
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Thu Apr 08, 2021 11:39 am

trinidadeG wrote:
...
Now, it seems like the news of 'Ajay Singh and party' was just political theatre..

https://www.livemint.com/news/india/ras ... 76150.html


Rumor may be a theater, bid is not. What is in the partner names, they can be edited.

SpiceJet turnaround(AKA tax write-off), 9W fleet takeover without export and import, 9W slot allocation, all were miracles, shouldn't have happened in real world, but they did.

I am sure last minute SpiceExpress and SpiceHealth will get involved, followed by a wire transfer from Mauritius.
All posts are just opinions.
 
CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Thu Apr 08, 2021 12:37 pm

dtw2hyd wrote:
trinidadeG wrote:
...
Now, it seems like the news of 'Ajay Singh and party' was just political theatre..

https://www.livemint.com/news/india/ras ... 76150.html


Rumor may be a theater, bid is not. What is in the partner names, they can be edited.

SpiceJet turnaround(AKA tax write-off), 9W fleet takeover without export and import, 9W slot allocation, all were miracles, shouldn't have happened in real world, but they did.

I am sure last minute SpiceExpress and SpiceHealth will get involved, followed by a wire transfer from Mauritius.


I’ve stopped being angry about these types of things (I will comment when it is in your face though). Basically it is pointless focusing on one businessperson, airline or political party. They all are the same. The issue is how business is done in india. We can try and reform india, but saying this one person is bad while the others are saints is just wrong. They all are the same. ALL. I still have hope with the Tatas because they are so big. That said, Indian aviation doesn’t seem able to get a break. Traffic keeps growing but Indian airlines can’t make money. So crazy. Also consolidations in India (the normal way markets work things out) is also a total disaster. If you buy your competitor you go down because you inherit crazy debt payments (or what ever). There literally is no way to say investment in businesses. You just have to close them. Which is crazy.
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Thu Apr 08, 2021 12:59 pm

CaliguyNYC wrote:
dtw2hyd wrote:
trinidadeG wrote:
...
Now, it seems like the news of 'Ajay Singh and party' was just political theatre..

https://www.livemint.com/news/india/ras ... 76150.html


Rumor may be a theater, bid is not. What is in the partner names, they can be edited.

SpiceJet turnaround(AKA tax write-off), 9W fleet takeover without export and import, 9W slot allocation, all were miracles, shouldn't have happened in real world, but they did.

I am sure last minute SpiceExpress and SpiceHealth will get involved, followed by a wire transfer from Mauritius.


I’ve stopped being angry about these types of things (I will comment when it is in your face though). Basically it is pointless focusing on one businessperson, airline or political party. They all are the same. The issue is how business is done in india. We can try and reform india, but saying this one person is bad while the others are saints is just wrong. They all are the same. ALL. I still have hope with the Tatas because they are so big. That said, Indian aviation doesn’t seem able to get a break. Traffic keeps growing but Indian airlines can’t make money. So crazy. Also consolidations in India (the normal way markets work things out) is also a total disaster. If you buy your competitor you go down because you inherit crazy debt payments (or what ever). There literally is no way to say investment in businesses. You just have to close them. Which is crazy.


I am not against sale as long as it truly takes burden away from tax payer.

If you combine tax payer cost for aviation post sale
    AI (Regional) losses and debt service
    AIATSL losses
    UDAN subsidy payouts (no data on how much is collected from airlines)
    AI Holdings Limited debt servicing cost (post sale)
    IAF VVIP transport cost for two 77Ws

Would it be less than current annual budget allocation AI getting from tax payer. Answer is No.

Either AI should be sold to a loaded foreign buyer like Qatar or shut it down.
All posts are just opinions.
 
VTORD
Posts: 762
Joined: Sat Dec 22, 2012 9:45 pm

Re: Air India Bidding

Thu Apr 08, 2021 1:11 pm

CaliguyNYC wrote:
Basically it is pointless focusing on one businessperson, airline or political party. They all are the same. The issue is how business is done in india. We can try and reform india, but saying this one person is bad while the others are saints is just wrong. They all are the same. ALL. I still have hope with the Tatas because they are so big.

I wouldn't put it past the GoI to have thrown in the Ajay Sing rumor as an insurance policy for opposition+press noise (incase people turn focus from the pandemic to an airline bid!!). It may very well be that Tatas are a done deal and this is just show-sha (I mean who else is there). I am expecting a tick up in Ratan Tata-centered WhatsApp forwards in the coming days with JRD thrown in for good measure. Not that they need it, general public perception in India re: Tatas means even the opposition will think twice before crying wolf.

Sure the Tatas are big but TCS rakes in north of 75% for them. Not exactly conglomeratey eh? and even they know it.
http://timesofindia.indiatimes.com/arti ... aign=cppst
 
CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 12:58 am

dtw2hyd wrote:
CaliguyNYC wrote:
dtw2hyd wrote:

Rumor may be a theater, bid is not. What is in the partner names, they can be edited.

SpiceJet turnaround(AKA tax write-off), 9W fleet takeover without export and import, 9W slot allocation, all were miracles, shouldn't have happened in real world, but they did.

I am sure last minute SpiceExpress and SpiceHealth will get involved, followed by a wire transfer from Mauritius.


I’ve stopped being angry about these types of things (I will comment when it is in your face though). Basically it is pointless focusing on one businessperson, airline or political party. They all are the same. The issue is how business is done in india. We can try and reform india, but saying this one person is bad while the others are saints is just wrong. They all are the same. ALL. I still have hope with the Tatas because they are so big. That said, Indian aviation doesn’t seem able to get a break. Traffic keeps growing but Indian airlines can’t make money. So crazy. Also consolidations in India (the normal way markets work things out) is also a total disaster. If you buy your competitor you go down because you inherit crazy debt payments (or what ever). There literally is no way to say investment in businesses. You just have to close them. Which is crazy.


I am not against sale as long as it truly takes burden away from tax payer.

If you combine tax payer cost for aviation post sale
    AI (Regional) losses and debt service
    AIATSL losses
    UDAN subsidy payouts (no data on how much is collected from airlines)
    AI Holdings Limited debt servicing cost (post sale)
    IAF VVIP transport cost for two 77Ws

Would it be less than current annual budget allocation AI getting from tax payer. Answer is No.

Either AI should be sold to a loaded foreign buyer like Qatar or shut it down.


How would a sale not take the burden away from the tax payer? The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down. But once sold, GOI doesn’t owe AI anything. Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Fri Apr 09, 2021 11:38 am

CaliguyNYC wrote:
dtw2hyd wrote:
CaliguyNYC wrote:

I’ve stopped being angry about these types of things (I will comment when it is in your face though). Basically it is pointless focusing on one businessperson, airline or political party. They all are the same. The issue is how business is done in india. We can try and reform india, but saying this one person is bad while the others are saints is just wrong. They all are the same. ALL. I still have hope with the Tatas because they are so big. That said, Indian aviation doesn’t seem able to get a break. Traffic keeps growing but Indian airlines can’t make money. So crazy. Also consolidations in India (the normal way markets work things out) is also a total disaster. If you buy your competitor you go down because you inherit crazy debt payments (or what ever). There literally is no way to say investment in businesses. You just have to close them. Which is crazy.


I am not against sale as long as it truly takes burden away from tax payer.

If you combine tax payer cost for aviation post sale
    AI (Regional) losses and debt service
    AIATSL losses
    UDAN subsidy payouts (no data on how much is collected from airlines)
    AI Holdings Limited debt servicing cost (post sale)
    IAF VVIP transport cost for two 77Ws

Would it be less than current annual budget allocation AI getting from tax payer. Answer is No.

Either AI should be sold to a loaded foreign buyer like Qatar or shut it down.
.


How would a sale not take the burden away from the tax payer?

Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.

The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down.

Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.


But once sold, GOI doesn’t owe AI anything.

It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff

Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.


The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.
All posts are just opinions.
 
oceanvikram
Posts: 103
Joined: Mon Feb 06, 2017 12:00 pm

Re: Air India Bidding

Fri Apr 09, 2021 1:24 pm

dtw2hyd wrote:
CaliguyNYC wrote:
dtw2hyd wrote:

I am not against sale as long as it truly takes burden away from tax payer.

If you combine tax payer cost for aviation post sale
    AI (Regional) losses and debt service
    AIATSL losses
    UDAN subsidy payouts (no data on how much is collected from airlines)
    AI Holdings Limited debt servicing cost (post sale)
    IAF VVIP transport cost for two 77Ws

Would it be less than current annual budget allocation AI getting from tax payer. Answer is No.

Either AI should be sold to a loaded foreign buyer like Qatar or shut it down.
.


How would a sale not take the burden away from the tax payer?

Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.

The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down.

Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.


But once sold, GOI doesn’t owe AI anything.

It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff

Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.


The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.

Can someone remind me what unit is Cr and what currency are we talking in as well.

Not all of us in airliners.net understand any of the Indian languages.
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.
 
Antarius
Posts: 3436
Joined: Thu Apr 13, 2017 1:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 2:05 pm

oceanvikram wrote:
dtw2hyd wrote:
CaliguyNYC wrote:
.


How would a sale not take the burden away from the tax payer?

Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.

The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down.

Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.


But once sold, GOI doesn’t owe AI anything.

It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff

Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.


The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.

Can someone remind me what unit is Cr and what currency are we talking in as well.

Not all of us in airliners.net understand any of the Indian languages.


And more importantly/in addition to units and currency, sources for these numbers?

Not all of us in airliners.net accept numbers being made up.
Militant Centrist
Let's all just use some common sense
 
VTORD
Posts: 762
Joined: Sat Dec 22, 2012 9:45 pm

Re: Air India Bidding

Fri Apr 09, 2021 2:16 pm

oceanvikram wrote:
Can someone remind me what unit is Cr and what currency are we talking in as well.

Not all of us in airliners.net understand any of the Indian languages.

Crore (Cr) is in INR
INR 1 Crore = 10,000,000 = Divide by 72(?) for USD = USD 138K give or take
INR 1 Lakh = 1,00,000
Indians usually talk large amounts in "lakh crore" or "thousand crore"
 
VTORD
Posts: 762
Joined: Sat Dec 22, 2012 9:45 pm

Re: Air India Bidding

Fri Apr 09, 2021 2:26 pm

According to this Sep 2020 article as of March 2019:
Total Debt: INR 58,255 Cr = USD 8 Billion
Total Debt assumed by GoI and moved to SVP to sweeten the deal: INR 29,464 Cr = USD 4 Billion

https://www.newindianexpress.com/busine ... 98832.html
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Fri Apr 09, 2021 3:47 pm

As usual where is the source technique, most of it is publicly available.

What was the AI budget allocation, hint it is not $$Billions every year.
https://transfin.in/update-on-air-india ... cquisition
Compare these to post-sale tax payer burden.

Year, Allocation in Cr.
2012 - 1,200
2013 - 6,000
2014 - 6,000
2015 - 5,780
2016 - 2,500
2017 - 1,710
2018 -1,800
2019 -1,630

AI(Regional),AIATSL,AIESL are not part of sale - Source PIM 2020 (What is PIM, look it up)
Paid off planes - Source PIM 2020
744 probably will move to AI(R), so does any planes buyer doesn't want
Also any employees buyer doesn't want will be moved to AI(R).
So 1000 Cr is conservative estimate.

AI Holdings AKA Tax Payer's bin bag
PIM2018 was decent, buyer would assume all AV assets and debt obligations and a little WC debt. Soon after that GoI went on steroids to appease buyers, paid off planes, move more debt to AI Holdings (Old/Bad AI). Bin bag will be close to $8 Billion.

AIATSL mostly operates airports with one flight a day, so inherently it is loss making venture. Because it has to operate 60+ airports, it has large number of underutilized workforce.
Compare that to AI(SATS) which operates 5 most busy airport in the country. Loss vs Profit.

AI(SATS) Profits. GoI is not doing anything, why cant taxpayers enjoy 50% percent of its profit, even other 50% profit goes to Singapore.

UDAN Subsidies
In 2019 1250 Cr were paid as subsidies, 800 Cr by AAI and 400 Cr Budget allocation. What is different now, AAI sold more profitable airports to friends, so all of UDAN subsidies have to come from budget allocation. Ignoring corruption has consequences.
https://psuwatch.com/government-grants- ... me-bailout

That brings to the expensive flying machines
AI purchased 2x77Ws for $400 Million (Source AI bridge loan RFPs) when FMV of a 77W was $80 Million each. Right there $240 Million hole.
It also took another $180 Million loan from NSSF for VVIP Refit.

It took 18 months to refit while AI paying monthly on $580 Million debt, probably $60 Million hole even before the first flight
===
IAF becomes world's latest operator of a out of production plane type.
No details on how IAF or GoI assumes what left of on $580 Million debt.
IAF is building up 77W logistics.
Recruit and train 77W crew enough to operate two ultra long haul planes, upgrade training facilities, probably new simulators, trainers, check pilots, whole shebang.
This thing is going to cost a fortune for Indian tax payer.


So don't ask for sources, just to change the discussion. Difficult to hide corruption.
All posts are just opinions.
 
clipperlondon
Posts: 89
Joined: Sun Jan 27, 2019 4:43 pm

Re: Air India Bidding

Fri Apr 09, 2021 4:32 pm

Regardless of all the above financial stuff, all the customer requires is Clean well maintained aircraft, Good Service, and an attitude.. Not too much to ask is it?
In all my years of giving AI a chance, sadly they have always been lacking, whomever owns the bloody thing.

I have been travelling from the UK to India for many years and have frankly given up on Air-India as a total basket case of an 'airline' and cannot see much more due to what is total and utter corruption endemic in India. And I speak as a total lover of all things Indian....

Stephen
 
Antarius
Posts: 3436
Joined: Thu Apr 13, 2017 1:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 4:36 pm

dtw2hyd wrote:
So don't ask for sources, just to change the discussion. Difficult to hide corruption.


It is your responsibility to post sources per forum rules. It is not our responsibility to fact check your unsourced opinions.
Militant Centrist
Let's all just use some common sense
 
CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 5:16 pm

dtw2hyd wrote:
CaliguyNYC wrote:
dtw2hyd wrote:

I am not against sale as long as it truly takes burden away from tax payer.

If you combine tax payer cost for aviation post sale
    AI (Regional) losses and debt service
    AIATSL losses
    UDAN subsidy payouts (no data on how much is collected from airlines)
    AI Holdings Limited debt servicing cost (post sale)
    IAF VVIP transport cost for two 77Ws

Would it be less than current annual budget allocation AI getting from tax payer. Answer is No.

Either AI should be sold to a loaded foreign buyer like Qatar or shut it down.
.


How would a sale not take the burden away from the tax payer?

Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.

The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down.

Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.


But once sold, GOI doesn’t owe AI anything.

It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff

Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.


The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.


There is a lot to unpack in your post. Even with corruption, selling AI makes total sense. I don't agree with the positioning you did. Here it is very simply:
AI (this is limited to the parts being sold) - losses money and has a ton of debt (please note LOSES MONEY every year). The GOI will sell AI for some value over real asset value (mostly of the planes and real estate). Also the GOI said they will see AI with a reasonable amount of debt that matches it's real assets - so $1B of airplanes, the new buyer would assume maybe $500M in debt). This totally makes sense - no need to saddle AI with the accumulated loses of years of bad management. So let's say AI has $1B in assets and $500M in debt. They sell it for $2B. So how is this good for the Indian tax payer - well say AI had $8B in total debt and annual loses of $500M (again only what is being sold). So now the GOI retains $7.5B in debt and takes the $2B in payment to pay down the $7.5B in debt to $5.5B. Also it stops bleeding $500M every year. Also India gets a properly run FSC and saves jobs. So even if a GOI insider buys AI, it can definitely still be good for tax payers. Don't know why you feel this is bad. In both the discussions on the sale of AI and Jet people were so offended by the buyer wanting a clean deal. Why - everywhere in the world this happens.
Finally - still don't agree with you on UDAN. It makes sense even if the GOI only gave funds to AI.
 
VTORD
Posts: 762
Joined: Sat Dec 22, 2012 9:45 pm

Re: Air India Bidding

Fri Apr 09, 2021 5:24 pm

dtw2hyd wrote:
Year, Allocation in Cr.
2012 - 1,200
2013 - 6,000
2014 - 6,000
2015 - 5,780
2016 - 2,500
2017 - 1,710
2018 -1,800
2019 -1,630


Those are not budget allocations. Those are infusions into AI because they couldn't meet their costs. Even the link you shared spells this out! I am not a finance guy but I am pretty sure budget allocations are different than equity infusions. And it would make sense that GoI does not "allocate" money for AI rather it does it for MoCA which it is doing (this year is 3000some Cr for e.g.,). The MoCA is not a revenue generating entity for the GoI so it needs "budget allocations" to run itself and to run India's civil aviation landscape. AI is a revenue generating entity so the expectation is that it meets its expenses from those revenues (salary, fuel, airport charges, benefits etc.,.). Anything left after that is profit. AI can't so the GoI has been stepping in for that via these "infusions".

If anything, this is making the case for divesting given the fact that the GoI has spent $3 Billion on AI with no sign of profitability in sight over the last almost decade!! I mean c'mon....
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Fri Apr 09, 2021 6:13 pm

CaliguyNYC wrote:
dtw2hyd wrote:
CaliguyNYC wrote:
.


How would a sale not take the burden away from the tax payer?

Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.

The tax payer will still be stuck writing off some of AI’s debt (because that won’t all transfer) but they have that debt even if shut down.

Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.


But once sold, GOI doesn’t owe AI anything.

It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff

Btw I don’t connect Udan with AI per se (I think Spice got the most flights). Udan are subsidized flights that airlines bid for to serve underserved routes. The US has the same thing. I am not against Udan at all. If it helps connect small cities to a nearby mega city, great.


The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.


There is a lot to unpack in your post. Even with corruption, selling AI makes total sense. I don't agree with the positioning you did. Here it is very simply:
AI (this is limited to the parts being sold) - losses money and has a ton of debt (please note LOSES MONEY every year). The GOI will sell AI for some value over real asset value (mostly of the planes and real estate). Also the GOI said they will see AI with a reasonable amount of debt that matches it's real assets - so $1B of airplanes, the new buyer would assume maybe $500M in debt). This totally makes sense - no need to saddle AI with the accumulated loses of years of bad management. So let's say AI has $1B in assets and $500M in debt. They sell it for $2B. So how is this good for the Indian tax payer - well say AI had $8B in total debt and annual loses of $500M (again only what is being sold). So now the GOI retains $7.5B in debt and takes the $2B in payment to pay down the $7.5B in debt to $5.5B. Also it stops bleeding $500M every year. Also India gets a properly run FSC and saves jobs. So even if a GOI insider buys AI, it can definitely still be good for tax payers. Don't know why you feel this is bad. In both the discussions on the sale of AI and Jet people were so offended by the buyer wanting a clean deal. Why - everywhere in the world this happens.
Finally - still don't agree with you on UDAN. It makes sense even if the GOI only gave funds to AI.


The math is simple from tax payer perspective.
If you have $9 Billion debt and $3 Billion annual revenue, there is a chance you climb out of the hole.
If you have $9 Billion debt and ZERO revenue, there is no way out.

Sale should at-least attempt to reduce the burden, this is creative accounting by moving debt and future costs to different bucket. Still with tax payer.

Tax payer payments to AI would be far less than debt servicing cost post sale.
All posts are just opinions.
 
Antarius
Posts: 3436
Joined: Thu Apr 13, 2017 1:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 6:27 pm

dtw2hyd wrote:
CaliguyNYC wrote:
dtw2hyd wrote:


Because entire debt and loss making parts of AI will be still with taxpayers. See the list.
This "sale" separates tax payers from revenue not debt.


Assuming $9 Billion total debt, can you put a number for "some of AI's debt"

In fact tax payers are taking more debt because of sale, GoI paid off non-current av debt by taking other working capital loans.



It owes to AI Holdings with all the debt and no revenue.
Say buyer assumes $1B(which I doubt) and AI holdings left with $8 Billion, how is GoI going to service and payoff



The USA doesn't have a state owned carrier, EAS makes sense.

India always had and will have a state owned regional carrier post-AI.
Just to bleed AI, GoI awarded UDAN to others.



AI (Regional) losses and debt service - 1000 Cr
AIATSL losses - 8,000 employees - 200 Cr
UDAN subsidy payouts (no data on how much is collected from airlines) - 1250 Cr
AI Holdings Limited debt servicing cost (post sale) - 60,000 Cr - 1,800 Cr (at 3%)
IAF VVIP transport cost for two 77Ws - 1000 Cr
AI Engineering Services Limited - break even.

Total 5,250 Crores/year and no revenue to payoff 60,000 Crores.


And buyer will have fully paid off fleet and $3 Billion annual revenue.

Few things stick out like sore thumbs from this transaction.
1) No debt to buyer
2) Annual revenue $3B to buyer
3) Paid off 77Ws and other NBs to buyer
4) Immediate transfer of AI(SATS) profits to buyer

You can show me how my math is wrong.


There is a lot to unpack in your post. Even with corruption, selling AI makes total sense. I don't agree with the positioning you did. Here it is very simply:
AI (this is limited to the parts being sold) - losses money and has a ton of debt (please note LOSES MONEY every year). The GOI will sell AI for some value over real asset value (mostly of the planes and real estate). Also the GOI said they will see AI with a reasonable amount of debt that matches it's real assets - so $1B of airplanes, the new buyer would assume maybe $500M in debt). This totally makes sense - no need to saddle AI with the accumulated loses of years of bad management. So let's say AI has $1B in assets and $500M in debt. They sell it for $2B. So how is this good for the Indian tax payer - well say AI had $8B in total debt and annual loses of $500M (again only what is being sold). So now the GOI retains $7.5B in debt and takes the $2B in payment to pay down the $7.5B in debt to $5.5B. Also it stops bleeding $500M every year. Also India gets a properly run FSC and saves jobs. So even if a GOI insider buys AI, it can definitely still be good for tax payers. Don't know why you feel this is bad. In both the discussions on the sale of AI and Jet people were so offended by the buyer wanting a clean deal. Why - everywhere in the world this happens.
Finally - still don't agree with you on UDAN. It makes sense even if the GOI only gave funds to AI.


The math is simple from tax payer perspective.
If you have $9 Billion debt and $3 Billion annual revenue, there is a chance you climb out of the hole.
If you have $9 Billion debt and ZERO revenue, there is no way out.

Sale should at-least attempt to reduce the burden, this is creative accounting by moving debt and future costs to different bucket. Still with tax payer.

Tax payer payments to AI would be far less than debt servicing cost post sale.


So an airline that continues to go further into debt will suddenly magically turn this around?

How?
Militant Centrist
Let's all just use some common sense
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Fri Apr 09, 2021 9:48 pm

Either sell properly(without nepotism or corruption) or shutdown and let go all employees, liquidate assets, deal with rest of the debt. Just like Jet Airways.

Since AI on the block ie.,, 2018, instead of reducing tax payer burden

1) Paying off non-current aviation debt when AI is buried in WC debt
2) ~$54 Million hole handling VVIP plane transaction (Japan also bought 2xVVIP 77Ws, none of this drama happened)
3) Moving more debt to AI Holdings
4) Not combining AIATSL and AI(SATS),
5) Keeping AI(R) - What happened to Governments should not be in the business of running airlines, story
6) Not publishing financials, more opaque now.
7) CAG not auditing AI Books

All these are signs of corruption, I know present day India doesn't believe in math, accounting or auditing, but still corruption which is an issue.

AI is not a private airline to say owners can do whatever they want, this is a state owned.
All posts are just opinions.
 
Antarius
Posts: 3436
Joined: Thu Apr 13, 2017 1:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 10:43 pm

And this kind of shenanigans has been going on for 40 years.

We all know there is corruption. It is just tiresome to hear the tiny violin over and over again as none of this is new. It has spanned decades and both major political parties. And pretty much anyone who has traveled to India and flown on AI can attest to, the airline needs to be put out of it's sad misery.
Militant Centrist
Let's all just use some common sense
 
CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Fri Apr 09, 2021 11:39 pm

dtw2hyd wrote:
Either sell properly(without nepotism or corruption) or shutdown and let go all employees, liquidate assets, deal with rest of the debt. Just like Jet Airways.

Since AI on the block ie.,, 2018, instead of reducing tax payer burden

1) Paying off non-current aviation debt when AI is buried in WC debt
2) ~$54 Million hole handling VVIP plane transaction (Japan also bought 2xVVIP 77Ws, none of this drama happened)
3) Moving more debt to AI Holdings
4) Not combining AIATSL and AI(SATS),
5) Keeping AI(R) - What happened to Governments should not be in the business of running airlines, story
6) Not publishing financials, more opaque now.
7) CAG not auditing AI Books

All these are signs of corruption, I know present day India doesn't believe in math, accounting or auditing, but still corruption which is an issue.

AI is not a private airline to say owners can do whatever they want, this is a state owned.


Sorry man but I think you are totally off the mark. You never just shut something down and liquidate. It is always better to sell and keep the concern going if possible - not only do you save the jobs but you also don’t lose the investment that was made - meaning the new owner will benefit from the losses AI incurred in developing routes etc. I just don’t get the logic behind your thinking (sorry - like don’t get it at all).

Going point by point - #1+3 were done to sell a clean asset - zero issue, #2 so what the GOI has decided to have planes for the PM - book it where ever, it is a real cost, #4 so what they can’t sell them and remember Ai airline loses money and the price they are getting is the present value of the cash flows (this is like finance 101) the cut of from revenue argument doesn’t work even if AI made money, #5 good, I think GOI needs to ensure small airports are served, #6+7 - if the new buyer doesn’t care, I do not (but sure it is strange).

Why do you care if some insider gets it over someone else? Who cares. I don’t hear anyone complaining. There is so much corruption in India. Literally Indians have allowed so much corruption, this ranks really low on the corruption scale IMHO. This privatization has been pretty above board for India. I mean it looks like it is going to the Tatas. Whatever. Not the end of the world. Btw they shut down Jet and that was a disaster from a tax payer pov. All those bank loans were help by the GOI. Here an Indian company will benefit from the GOI’s investments.
 
Sokes
Posts: 2775
Joined: Sat Mar 09, 2019 4:48 pm

Re: Air India Bidding

Sat Apr 10, 2021 10:35 am

CaliguyNYC wrote:
It is always better to sell and keep the concern going if possible - not only do you save the jobs but you also don’t lose the investment that was made ...

Not true. Watch the movie "Wall Street".
I don't know if what you say is true for Air India.
Why can't the world be a little bit more autistic?
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Sat Apr 10, 2021 12:06 pm

CaliguyNYC wrote:
dtw2hyd wrote:
Either sell properly(without nepotism or corruption) or shutdown and let go all employees, liquidate assets, deal with rest of the debt. Just like Jet Airways.

Since AI on the block ie.,, 2018, instead of reducing tax payer burden

1) Paying off non-current aviation debt when AI is buried in WC debt
2) ~$54 Million hole handling VVIP plane transaction (Japan also bought 2xVVIP 77Ws, none of this drama happened)
3) Moving more debt to AI Holdings
4) Not combining AIATSL and AI(SATS),
5) Keeping AI(R) - What happened to Governments should not be in the business of running airlines, story
6) Not publishing financials, more opaque now.
7) CAG not auditing AI Books

All these are signs of corruption, I know present day India doesn't believe in math, accounting or auditing, but still corruption which is an issue.

AI is not a private airline to say owners can do whatever they want, this is a state owned.


Sorry man but I think you are totally off the mark. You never just shut something down and liquidate. It is always better to sell and keep the concern going if possible - not only do you save the jobs but you also don’t lose the investment that was made - meaning the new owner will benefit from the losses AI incurred in developing routes etc. I just don’t get the logic behind your thinking (sorry - like don’t get it at all).

Going point by point - #1+3 were done to sell a clean asset - zero issue, #2 so what the GOI has decided to have planes for the PM - book it where ever, it is a real cost, #4 so what they can’t sell them and remember Ai airline loses money and the price they are getting is the present value of the cash flows (this is like finance 101) the cut of from revenue argument doesn’t work even if AI made money, #5 good, I think GOI needs to ensure small airports are served, #6+7 - if the new buyer doesn’t care, I do not (but sure it is strange).

Why do you care if some insider gets it over someone else? Who cares. I don’t hear anyone complaining. There is so much corruption in India. Literally Indians have allowed so much corruption, this ranks really low on the corruption scale IMHO. This privatization has been pretty above board for India. I mean it looks like it is going to the Tatas. Whatever. Not the end of the world. Btw they shut down Jet and that was a disaster from a tax payer pov. All those bank loans were help by the GOI. Here an Indian company will benefit from the GOI’s investments.


Clean asset is a good strategy if corresponding debt is also on the table. Otherwise it is giving away family silver.
AI(SATS) should be a bargain chip to sell AIATSL, not taking it off the table.

Yes any country can buy VVIP planes, but there is no need to book $54 Million loss on a debt ridden loss making airline in the process. I posted this on MilAV thread few years back, AI will be used as a front for buying VVIP planes, because Indian Air Force cannot borrow money from foreign banks (Abu Dhabi).

If everyone in India knows this is corruption, why argue here it is not.
All posts are just opinions.
 
CaliguyNYC
Posts: 1296
Joined: Tue Sep 27, 2016 7:27 pm

Re: Air India Bidding

Sat Apr 10, 2021 5:07 pm

Sokes wrote:
CaliguyNYC wrote:
It is always better to sell and keep the concern going if possible - not only do you save the jobs but you also don’t lose the investment that was made ...

Not true. Watch the movie "Wall Street".
I don't know if what you say is true for Air India.


I did say if possible. You always do try and keep as much going when governments sell off assets (from a govt pov). Shutting down and dismembering can raise more short term cash (although in AI’s case I can’t see the individual assets being worth than the parts and/or being worth more than the whole). But in the end we won’t know until we know the price.

But the notion that keeping debt and selling clean assets is giving away the family jewels (said in another post) is just not the way you look at privatizations and or any bankruptcy sale. The GOI has said they will sell AI with a level of debt that matches the hard assets they are selling (makes total sense to me). How or why should a new buyer have to take on decades of debt from AI mismanagement (same thing in bankruptcy sales). Now if the GOI sold AI as a clean asset for 1 rupee, sure we can talk. But when we don’t even know the selling price and what jobs they will keep, how can we say that. There is such anger here based on people not understanding how financial transactions work. Valuation is typically the present value of cash flows. If you don’t understand that concept, you really can’t comment on “giving away” anything. Now can people point out that they feel the bidding process isn’t fair or even the final price seeming low (and wanting to understand how the value was obtained), sure. But let’s be honest, we’ve had some non typical deal analysis on this forum over the years (I’m being polite). People saying things because they don’t like the city the airline is based, where they hub, who the PM is, which airline won the bid etc. All my point is, nothing happening so far raises any red flags for me, and I do M&A for a living. The biggest take away for me is that AI had very few bidders. So this doesn’t seem like a give away at all.
 
Breathe
Posts: 788
Joined: Sat Mar 18, 2017 8:06 pm

Re: Air India Bidding

Sat Apr 10, 2021 6:42 pm

Sokes wrote:
CaliguyNYC wrote:
It is always better to sell and keep the concern going if possible - not only do you save the jobs but you also don’t lose the investment that was made ...

Not true. Watch the movie "Wall Street".
I don't know if what you say is true for Air India.

"Blue Horseshoe loves Air India" :D
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Sat Apr 10, 2021 7:44 pm

"Selling" clean assets is a misnomer, preferred buyer is not going to pay anything. Fictitious rule like only Indians can bid is intentional and India is not an investment friendly environment.

AI is debt ridden, fleet needs complete revamp are talking points to justify $0 sale.

Buyer's Gift Basket, Tax Payers' Bin Bag
AI has zero debt, AI Holdings Limited has all the debt
AI will have less than 4,500 employees. AIATSL has 8,000 AIESL has 4,000
AI Express is profitable. AI(Regional) is loss making
AI(SATS) is profitable. AIATSL is loss making
$3 Billion Annual Revenue, $770 Million budget allocation to support left over sick aviation entities and VVIP transport
$200 Million *A membership
All posts are just opinions.
 
majano
Posts: 306
Joined: Sun Oct 14, 2018 10:45 am

Re: Air India Bidding

Sat Apr 10, 2021 8:56 pm

dtw2hyd wrote:
"Selling" clean assets is a misnomer, preferred buyer is not going to pay anything. Fictitious rule like only Indians can bid is intentional and India is not an investment friendly environment.

AI is debt ridden, fleet needs complete revamp are talking points to justify $0 sale.

Buyer's Gift Basket, Tax Payers' Bin Bag
AI has zero debt, AI Holdings Limited has all the debt
AI will have less than 4,500 employees. AIATSL has 8,000 AIESL has 4,000
AI Express is profitable. AI(Regional) is loss making
AI(SATS) is profitable. AIATSL is loss making
$3 Billion Annual Revenue, $770 Million budget allocation to support left over sick aviation entities and VVIP transport
$200 Million *A membership

Thank you for all the points you have raised which, for an outsider like me, were informative. I find it somewhat concerning that certain posters are suggesting that because corruption has been going on for some time you should keep quite and just accept it.

Having said the above, using Stephen Covey parlance, your view seems to be that because a win-win outcome for the taxpayer as represented by the GOI and the private sector purchaser is not likely or even possible, it is better to end with a lose-lose outcome.

One poster correctly noted that even if the government retains AI as is and generates revenue, it can only be at a loss, and the USD8B debt won't go away.

I hear your argument that selling it to the private sector purchaser in the form currently proposed will not wipe away the annual losses, but are losses likely to come down for the parts retained by the government? If so, then there is some benefit.

If I take the view expressed by another poster that the buyer will inherit some of the debt, proportionate to the acquired assets, there could be a further benefit to taxpayers with the reduction of historical debt.

Retaining some of the loss-making units (AI Regional and AIATSL) could be a strategic choice by the GOI to expand aviation and make airtravel a viable option for a greater proportion of the population. I read here o A-Net that Russia, as an example uses various forms of support and subsidies for a similar purpose.

So, I am not doubting, at any point, what you have asserted here. What I am just probing is whether, in the absence of a clear win-win outcome, is it not better for the taxpayer to -

1. Reduce annual losses?
2. Possibly reduce the debt?
3. Continue supporting aviation as a viable option for a greater proportion of the Indian population?
 
Antarius
Posts: 3436
Joined: Thu Apr 13, 2017 1:27 pm

Re: Air India Bidding

Sat Apr 10, 2021 9:04 pm

majano wrote:
dtw2hyd wrote:
"Selling" clean assets is a misnomer, preferred buyer is not going to pay anything. Fictitious rule like only Indians can bid is intentional and India is not an investment friendly environment.

AI is debt ridden, fleet needs complete revamp are talking points to justify $0 sale.

Buyer's Gift Basket, Tax Payers' Bin Bag
AI has zero debt, AI Holdings Limited has all the debt
AI will have less than 4,500 employees. AIATSL has 8,000 AIESL has 4,000
AI Express is profitable. AI(Regional) is loss making
AI(SATS) is profitable. AIATSL is loss making
$3 Billion Annual Revenue, $770 Million budget allocation to support left over sick aviation entities and VVIP transport
$200 Million *A membership

Thank you for all the points you have raised which, for an outsider like me, were informative. I find it somewhat concerning that certain posters are suggesting that because corruption has been going on for some time you should keep quite and just accept it.

Having said the above, using Stephen Covey parlance, your view seems to be that because a win-win outcome for the taxpayer as represented by the GOI and the private sector purchaser is not likely or even possible, it is better to end with a lose-lose outcome.

One poster correctly noted that even if the government retains AI as is and generates revenue, it can only be at a loss, and the USD8B debt won't go away.

I hear your argument that selling it to the private sector purchaser in the form currently proposed will not wipe away the annual losses, but are losses likely to come down for the parts retained by the government? If so, then there is some benefit.

If I take the view expressed by another poster that the buyer will inherit some of the debt, proportionate to the acquired assets, there could be a further benefit to taxpayers with the reduction of historical debt.

Retaining some of the loss-making units (AI Regional and AIATSL) could be a strategic choice by the GOI to expand aviation and make airtravel a viable option for a greater proportion of the population. I read here o A-Net that Russia, as an example uses various forms of support and subsidies for a similar purpose.

So, I am not doubting, at any point, what you have asserted here. What I am just probing is whether, in the absence of a clear win-win outcome, is it not better for the taxpayer to -

1. Reduce annual losses?
2. Possibly reduce the debt?
3. Continue supporting aviation as a viable option for a greater proportion of the Indian population?


To clarify, the point is not that because corruption has existed, it should be tolerated. It is that corruption exists and it has led to this mess after 40 years and now, what is the best path forward?

At the end of the day, if the result costs the taxpayers less and it results in a crony sale, then the taxpayers STILL come out ahead.

This selective banging of the drum on corruption ignores the broader issue - holding on to AI is worse than any other alternative. Certain posters can't see the forest for the trees.
Militant Centrist
Let's all just use some common sense
 
dtw2hyd
Posts: 8992
Joined: Wed Jan 09, 2013 12:11 pm

Re: Air India Bidding

Sun Apr 11, 2021 1:24 am

majano wrote:
dtw2hyd wrote:
"Selling" clean assets is a misnomer, preferred buyer is not going to pay anything. Fictitious rule like only Indians can bid is intentional and India is not an investment friendly environment.

AI is debt ridden, fleet needs complete revamp are talking points to justify $0 sale.

Buyer's Gift Basket, Tax Payers' Bin Bag
AI has zero debt, AI Holdings Limited has all the debt
AI will have less than 4,500 employees. AIATSL has 8,000 AIESL has 4,000
AI Express is profitable. AI(Regional) is loss making
AI(SATS) is profitable. AIATSL is loss making
$3 Billion Annual Revenue, $770 Million budget allocation to support left over sick aviation entities and VVIP transport
$200 Million *A membership

Thank you for all the points you have raised which, for an outsider like me, were informative. I find it somewhat concerning that certain posters are suggesting that because corruption has been going on for some time you should keep quite and just accept it.

Having said the above, using Stephen Covey parlance, your view seems to be that because a win-win outcome for the taxpayer as represented by the GOI and the private sector purchaser is not likely or even possible, it is better to end with a lose-lose outcome.

One poster correctly noted that even if the government retains AI as is and generates revenue, it can only be at a loss, and the USD8B debt won't go away.

I hear your argument that selling it to the private sector purchaser in the form currently proposed will not wipe away the annual losses, but are losses likely to come down for the parts retained by the government? If so, then there is some benefit.

If I take the view expressed by another poster that the buyer will inherit some of the debt, proportionate to the acquired assets, there could be a further benefit to taxpayers with the reduction of historical debt.

Retaining some of the loss-making units (AI Regional and AIATSL) could be a strategic choice by the GOI to expand aviation and make airtravel a viable option for a greater proportion of the population. I read here o A-Net that Russia, as an example uses various forms of support and subsidies for a similar purpose.

So, I am not doubting, at any point, what you have asserted here. What I am just probing is whether, in the absence of a clear win-win outcome, is it not better for the taxpayer to -

1. Reduce annual losses?
2. Possibly reduce the debt?
3. Continue supporting aviation as a viable option for a greater proportion of the Indian population?


I will be happy if any or all of my assertions are wrong. One thing I can guarantee buyer will not take any debt, future lease payment amounts will be publicized as debt.

The excessive chatter about debt and fleet revamp is to make public feel buyer is doing a favor by taking this hot potato off their hands.

About keeping AI(R). Couple of months after clean asset, well equipped, revenue rich AI is gifted away, there is no guarantee AI(R) will not buy 50 WBs. Deja Vu.

To promote air travel, there is RDG, there is UDAN(RCS) which was supposed to be mainline carrier funded, now a tax burden upto $179 Million/year. No need for AI(R) which has to survive on left over UDAN routes or politically motivated loss making routes.

The way it looks right now, Alan Harper had better divorce settlement than Indian Tax Payer trying to sell AI.
All posts are just opinions.
 
Sokes
Posts: 2775
Joined: Sat Mar 09, 2019 4:48 pm

Re: Air India Bidding

Sun Apr 11, 2021 1:27 am

CaliguyNYC wrote:
The biggest take away for me is that AI had very few bidders. So this doesn’t seem like a give away at all.

Interesting point. I pass it on to the more knowledgeable members here.
Why can't the world be a little bit more autistic?
 
Sokes
Posts: 2775
Joined: Sat Mar 09, 2019 4:48 pm

Re: Air India Bidding

Sun Apr 11, 2021 1:38 am

Antarius wrote:
This selective banging of the drum on corruption ignores the broader issue - holding on to AI is worse than any other alternative. Certain posters can't see the forest for the trees.

I agree. Many decades of socialist rhetoric have spoilt the mind of most Indians. India has serious ideological issues.
There was a guy once on social media. When he retired he passed his government job on to his son. On top of it he complained that he had to pay a bribe. I asked him if he complains about to cost to his purse or about the job not being given on merit. I never got an answer.

And while I agree that all Indian governments are corrupt, we have to compare the new government's behavior with old ones.
Why can't the world be a little bit more autistic?
 
RR757
Posts: 6
Joined: Fri Mar 13, 2009 11:16 pm

Re: Air India Bidding

Sun Apr 11, 2021 2:31 am

Captaincurious wrote:
Tata Group and Spice Jet are announced as the final bidders of Air India. They are now allowed to access corporate information to make their final bids. https://simpleflying.com/tata-group-spicejet-air-india/


Good Luck with Tata. Our jobs in London have been ‘outsourced’ and shifted to Tata by a few idiot managers promoting their “amazing cost savings”. So far, a disaster, as expected. These managers collect their bonus and move on, leaving decent people to tidy up their Sh1t.
 
avier
Posts: 1237
Joined: Tue Aug 07, 2018 12:38 pm

Re: Air India Bidding

Mon Apr 12, 2021 4:04 pm

AI has other liabilities, beyond their only spoken about debts in their books. The next worst after their debts, are their employee unions. Reducing headcount and renegotiating employment terms with AI employees, will be a nightmare for TATA's. Their crew don't even want to fly as much as the FDTL allowed by DGCA (which other airlines follow), and instead have their own chilled out FDTL requirements. Wonder how such an airline can compete with the likes of 6E, where their crew often do six sectors a day in domestic.

Other issues are their complex and very mixed fleet structure. Too many types, with too many configurations. Plenty of them are still grounded, since pre-covid times, due lack of spares and requiring MX overhauls.

So by simply removing or reducing their debts, they aren't all gold all of a sudden. I wonder how much extra investment will TATA's require to keep this while elephant running. In a single year (FY20-21) AI lost 10,000Cr.
https://www.thehindu.com/business/air-i ... 164016.ece

How on earth is any new buyer to plug or reduce that to some sane levels in the short to medium term? Even if this airline is given for free, the new buyers will need to shell out many tens of thousands of crores to keep the airline running.
And yet, some seem to have a problem with AI being given away by the govt. For the fact that even anyone is touching this mess called AI, should bring about great relief to the Indian tax payers.
 
hohd
Posts: 1002
Joined: Sat May 17, 2008 1:03 am

Re: Air India Bidding

Mon Apr 12, 2021 4:33 pm

Who said the AI entity which GOI is selling has no debt. The AI entity which is being sold, will have all the debt associated with aircraft and added debt associated with real estate. Also the bidder has to submit a separate line item bid for AI express, so we will know how much it is truly valued.

Even will all these inducements, so far there has been only one serious bidder - Tatas, I would discount SpiceJet's bid as their very survival is in question. And there is no guarantee even Tata will buy this.

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