In what could make Air India disinvestment a daunting task for the government, the national carrier reported highest-ever annual loss in financial year 2018-19 due to low fleet utilisation and high fuel prices among others. The debt-laden carrier also incurred losses due to closure of airspace by Pakistan which resulted in higher costs and caused a daily loss of Rs 3 to 4 crore.
Aviation minister Hardeep Singh Puri on Thursday said that Air India's net loss has climbed to its highest annual level ever in 2018-19, since its merger with Indian Airlines in 2007. The airline has not reported a profit ever since its merger with Indian Airlines.
Air India's net loss increased to Rs 8,556.35 crore in 2018-19, compared to net loss of Rs 5,348.18 crore reported for 2017-18, Puri said in Lok Sabha. The cash-strapped carrier's accumulated losses in the past decade stood at Rs 69,575.64 crore, he informed the lower house of the Parliament.
In view of the continuous losses suffered by Air India and its mounting debt burden, the government had approved Rs 30,000-crore turnaround plan in 2012 for the revival of the carrier. The airline has received an equity infusion of Rs 30,520.21 crore till date from 2011-12, the minister said in the Lok Sabha.
"A total debt amounting to Rs 29,464 crore to be transferred from Air India Ltd to the SPV viz Air India Assets Holding Co Ltd. A cash support of Rs 3,975 crore to Air India, inclusive of Rs 1,630 crore already infused in AI in FY 2018- 19. Provide a government guarantee of Rs 7,600 crore, inclusive of Rs 3,000 crore already provided to Air India in FY 2018-19, to raise new debt for payment of stretched liabilities," Puri said.
Last week, the aviation minister had told Rajya Sabha that Air India may have to shut down its operations if the government fails to privatise the airline.
The cash-strapped airline incurred an operating loss of Rs 491 crore till July 2, 2019, after Pakistan closed its airspace for Indian carriers. Pakistan had closed its airspace after the India Air Force's February 26 Balakot strike.
Air India's total debt stands at Rs 58,000 crore, along with cumulative loss of Rs 70,000 crore. In the last financial year alone, the carrier is estimated to have suffered losses to the tune of Rs 7,600 crore.
In wake of rising losses of Air India, Finance Minister Nirmala Sitharaman last month announced that the government is aiming to sell the national carrier by March next year. The disinvestment is not going to be easy as there are plenty of roadblocks that have to be cleared before the sale process starts.
The government had last year attempted to divest its share in Air India by 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.
Now, the Modi government is trying to sell Air India to a private player again. Recently, the Cabinet approved a new process for strategic disinvestment to accommodate stakeholder consultation before inviting bids, which was not allowed earlier. This development would help the government understand investor demand and concerns better in specific stake sales.
Edited by Chitranjan Kumar