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Air India could post over Rs 7,600 crore loss in 2018-19, highest so far

IANS  |  New Delhi 

In what could make sale an uphill task for the government, the national carrier could report highest-ever loss of over Rs 7,600 crore in financial year 2018-19 on account of low fleet utilization and high fuel prices among others.

An official source said the total revenue in the previous fiscal stood close to Rs 26,000 crore.

The has gone into losses ever since its merger with in 2007. The massive fleet order cleared by the continues to weigh on its books.

"In the first two months of the fiscal we have seen 20-25 per cent increase in our sales. If, restriction from Pakistani airspace is withdrawn, we can still make operating profit," he said.

The airline's financial has shown signs of improvement following suspension of flights in April.

The government had last year set the ball rolling for Air India's disinvestment offering 76 per cent equity stake to private parties but the plan proved to be a damp squib -- not a single investor turned up to submit expression of interest (EoI). This forced the government to put off the sale process.

It maintained that the plan would be taken up once the operating environment in the aviation sector improved. Impending was another reason for putting the plan on hold.

As the has returned with a thumping majority, it is now keen to complete its unfinished agenda from the previous term.

"The plan is to sell the within 100 days. The accounts for last fiscal is in the process of being closed so that bidding process could start at the earliest. This time, the government is in no mood to relent on the sale of Air India," an official source told IANS.

In order to sweeten the deal for this time, the government is likely to offer entire 100 per cent stake in the and consider transaction EY's suggestion to transfer more debt to a special purpose vehicle (SPV).

The previous had decided to transfer debt amounting Rs 29,464 crore along with other non-core assets to the newly-created SPV to attract bidder interest for the carrier.

As total debt of the airline has since gone up to about Rs 58,000 crore, the transaction has suggested shifting more debt to the SPV so that private parties' liabilities come down.

"When bankers are finding it tough to get a buyer for Jet Airways, it will certainly be very difficult to convince investors to take over It is generally believed that foreign traffic rights is a big asset of Air India but following the experience after it is common knowledge as to how can an airline get bilateral seat quota," said an at one of the big four global consultancies.

But a said that the buyer of Air India would get most lucrative international routes, trained manpower, best flying times and a considerably big fleet.

"I don't think higher losses would deter the buyers from bidding for the airline. Of course, it will affect level of interest but there would definitely be some interest this time," he said.

(Nirbhay Kumar can be contacted at nirbhay.k@ians.in)

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, June 10 2019. 19:48 IST
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