Ailing Air India: No Happy Ending?
Once a showpiece, now a loss-maker
The woes of ailing Air India airline do not seem to have an end in sight anytime soon.
The loss-making Maharaja airline, once the pride of India and a showpiece for the world aviation industry, is today having difficulty finding a suitable buyer as it has to face disinvestment because of mounting losses over the years.
The frequent extensions being given for the bidding process is enough indication that all is not well. Nearly half a dozen times, dates and terms for bidding have been shifted, and indications are that the present October 31. 2020 deadline may again be extended to December 31, 2020.
In the Independent Auditor’s Report as seen on Air India’s website, for the 2018-2019 year: “The Company has incurred a net loss of Rs. 84,748.0 Million during the year ended March 31, 2019 and, as of that date, the Company’s current liabilities exceeded its current assets by Rs. 6,52,458.7 Million and it has accumulated losses of Rs. 6,26,936.3 Million which has resulted in complete erosion of the net worth of the company.
“In spite of these events or conditions which may cast a doubt on the ability of the company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the continued support of the Government of India…”
The valuation process is also undergoing changes partly because of the COVID-19 pandemic which has made the large fleet idle and non-revenue generating for months.
Terms and conditions of the sale, or disinvestment, is also a ticklish issue including who – and who should not – be allowed to bid for the assets. Other issues include not only the aircraft but the routes and real estate, among other things.
One “other thing” for instance is that Air India has a large collection of art works, which was bought over the decades by the top brass of the airline. The rationale behind these purchases is that they were keen to see that Air India remained a reputed and respected airline on the world scene.