Air India divestment process looks very uncertain due to COVID-19 crisis, says CRISIL
The disinvestment process for national carrier Air India looks 'very uncertain' in the wake of the coronavirus pandemic that has impacted the aviation sector the most globally, according to rating agency CRISIL
Mumbai: The disinvestment process for national carrier Air India looks "very uncertain" in the wake of the coronavirus pandemic that has impacted the aviation sector the most globally, according to rating agency CRISIL.
In another attempt to sell loss-making Air India, the government, in January this year, sought Expression of Interest (EoI) and the deadline for submission of EoI has now been extended till 30 June. Initially, the deadline was 17 March and was first extended till 30 April.
"With the current kind of environment, for people to bid for a known airline like Air India and the kind of commitment that they would have to make, it looks very uncertain that their process can go through in the current scheme of things," Jagannarayan Padmanabhan, Director and Practice Leader (Transport and Logistics) at CRISIL Infrastructure Advisory said on Thursday.
However, CRISIL expects mergers and acquisitions of airlines in the face of the losses that the domestic carriers are estimated to suffer in the current situation.
"The EoI might have been issued but in the current situation, airlines are unlikely to take up any new assets on its books," he said.
"The Air India part of privatisation will have to wait for its turn. What is the timeline, I don't know as of now. But the current environment may not be the best time to go through (the sale process)," Padmanabhan said.
In 2018, the government's efforts to divest Air India failed to take off. At that time, 76 percent stake in the airline was to be sold.
Under the current disinvestment plan, the government has proposed to sell 100 percent stake in the airline along with entire shareholding in AI Express and 50 percent in ground handling joint venture -- Air India-SATS.
Of the airline's total debt of Rs 60,074 crore as of 31 March, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
Padmanabhan said all airlines irrespective of their size or business model or nature of operations have been impacted due to the coronavirus outbreak and all are looking at how to survive in the current situation.
According to him, the domestic aviation industry is expected to incur a combined loss to the tune of up to Rs 25,000 crore, with the airline sector accounting for an estimated loss of Rs 17,000 crore.
Maharashtra's COVID-19 recovery rate stands at 97.06 percent, while the fatality rate is 2.12 percent
Among the eight regions of Maharashtra, the Pune region reported the highest 1,483 new COVID-19 cases, followed by 970 cases in the Mumbai region
On 9 February, Maharashtra had reported 2,515 new COVID-19 cases, while 22 deaths were registered on 8 March