The government has expedited the process to sell Air India (AI) and about six entities including Hinduja Group, the UAE’s Etihad Airways, Germany’s Lufthansa, Singapore Airlines and the Tata Group may show interest in AI.
It is estimated that the state-owned airline, Air India is in a loss of over Rs 30-35 crore daily during the pandemic, due to virtual grounding of its airlines, which was up in Dec 2019 for about Rs 20-26 crore. Company’s employees cost nearly around 11% of its total revenue receipts as per in 2019 and, other airline’s employee cost to revenue ratio was 11% for Indigo, 19% for Lufthansa and 15% for Singapore Airlines. Air India has employed 9,426 people (excluding contractual and casual workers) last year on November, 1 of which 36% will be retired by the financial year 2024.
Due to the Covid-19 pandemic, the Department of Investment and Public Asset Management (DIPAM) has forced to extend the Expression of Interest (EoI) submission deadline multiple times and a call would be taken if the deadline is extended further from 31, August.
Several other steps have been taken for luring the buyers expeditiously including a plan of trimming airline’s strong workforce of 9,400. In the board meeting held on July, 7 it was approved that the company can send an employee on leave without paying for six months or two years and the same period can be extended up to five years.
Many queries on AI have been received from stakeholders and interested parties including the Lufthansa and Singapore Airlines. Government has also retrained its provision for substantial ownership and effective control of the airline must remain within an Indian entity but now, foreign investors/airlines are allowed to own 100% in Air India.