NEW DELHI: Air India is estimated to have incurred losses of Rs 9,500- Rs 10,000 crore in this financial year, the highest since the merger of the ailing national carrier with Indian Airlines in 2007, as the Covid-19 pandemic impacted revenues of all airlines.
“Of the total, about Rs 8,000 crore is estimated to be cash losses and the rest will be on account of depreciation cost,” said a senior government official, who did not wish to be identified.
The record loss is likely to impact the valuation of Air India, as the government prepares to sell the national carrier in the next fiscal.
Air India had reported losses of Rs 8,000 crore for 2019-20, lower than Rs 8,500 crore for 2018-19, but higher than the net loss of Rs 5,300 crore for 2017-18.
The airline has been raising money to fund losses and its operational costs. In the current fiscal, it plans to raise about Rs 5,000 crore through National Small Savings Funds (NSSF) and about Rs 1,000 crore from three banks.
“We have already got Rs 4,000 crore from NSSF and the rest Rs 1,000 crore will come by the end of this fiscal,” said the official.
According to the budget for 2021-22, Air India will raise more than Rs 4,000 crore during the year and the money is likely to be used to fund operations of the airline.
The government has received multiple expressions of interest from companies for Air India, and it is in the process of shortlisting companies that qualify for the second phase of the bidding process.
Tata Group is believed to be the most serious bidder.
After failing to find takers for a 76% stake in Air India in 2018, the government decided last year to offload 100% stake in the airline and its low-cost international subsidiary, Air India Express, as well as a 50% stake in ground-handling unit AISATS.
The deadline for submission of interests had to be deferred several times because of the pandemic and the government also sweetened the offer by substantially reducing debt.
In an attempt to sweeten the offer, the government allowed suitors to base their bids on enterprise value. This was subject to the condition that of the total bid amount, about 15% would go to the government as the price of Air India and the remaining 85% would be debt that the winner takes on.
“Of the total, about Rs 8,000 crore is estimated to be cash losses and the rest will be on account of depreciation cost,” said a senior government official, who did not wish to be identified.
The record loss is likely to impact the valuation of Air India, as the government prepares to sell the national carrier in the next fiscal.
Air India had reported losses of Rs 8,000 crore for 2019-20, lower than Rs 8,500 crore for 2018-19, but higher than the net loss of Rs 5,300 crore for 2017-18.
The airline has been raising money to fund losses and its operational costs. In the current fiscal, it plans to raise about Rs 5,000 crore through National Small Savings Funds (NSSF) and about Rs 1,000 crore from three banks.
“We have already got Rs 4,000 crore from NSSF and the rest Rs 1,000 crore will come by the end of this fiscal,” said the official.
According to the budget for 2021-22, Air India will raise more than Rs 4,000 crore during the year and the money is likely to be used to fund operations of the airline.
The government has received multiple expressions of interest from companies for Air India, and it is in the process of shortlisting companies that qualify for the second phase of the bidding process.
Tata Group is believed to be the most serious bidder.
After failing to find takers for a 76% stake in Air India in 2018, the government decided last year to offload 100% stake in the airline and its low-cost international subsidiary, Air India Express, as well as a 50% stake in ground-handling unit AISATS.
The deadline for submission of interests had to be deferred several times because of the pandemic and the government also sweetened the offer by substantially reducing debt.
In an attempt to sweeten the offer, the government allowed suitors to base their bids on enterprise value. This was subject to the condition that of the total bid amount, about 15% would go to the government as the price of Air India and the remaining 85% would be debt that the winner takes on.
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5 Comments on this Story
 | Sundara Sundara22 seconds ago Ha Ha Our FM wants to sell Nobody will buy a Man Eater. The main problem is whoever buy the operating cost will be very high. That is the main problem with Maharaja. Who will invest such a huge money and wait for five years for turn around. Better invest that money in stock market and book profit. I think in Indian history most of the FM are lawyers. Except MM. Taxpayers money can spend subsidy , and etc for getting votes for politicians. It is an another kind of poll expenditure for ruling party. Jago Jago. |
| Nilotpal Shyam28 minutes ago Please sell or close it. Give some relief to middle class tax payers. Even after operating bubble if AirIndia cannot recover its operational costs and its a problem with its management. Better to dilute it |
| Harikesh A32 minutes ago Agree..best to close Air India and allot slots to the biggest bidder rather than try to sell which may not even work out. Who will want to buy this white elephant with a culture like what it has |