Addendum
COVID-19 new obstacle to Air India sale
March 1st 2020
The Indian government’s second attempt to sell its debt-ridden national flag carrier, Air India, could be stymied by the COVID-19 virus outbreak, the International Air Transport Association’s (IATA) chief economist, Brian Pearce, said during a recent two-day workshop in Singapore that examined the impact of the outbreak on the industry. Read More »
Air India’s disinvestment process might be “quite difficult at this moment” and overall, it was going to be “very difficult times” for Indian airlines, Pearce said. “Clearly, the international market for Indian carriers is going to be a lot weaker and inbound tourist traffic is going to be hit very hard by the effect of the coronavirus crisis,” he said.
Pearce forecast more consolidation among Indian airlines because of COVID-19 and added “privatization of Air India is a necessary step for the long-term for the Indian market”, but noted equity markets already are quite weak.
The Indian government hopes to sell 100% of the loss-making carrier. On January 27, it issued a Preliminary Information Memorandum (PIM) for Air India disinvestment, proposing the sale of the carrier as well as budget airline, Air India Express, and the 50% holding in AISATS, an equal joint venture with Singapore.
This is the government’s second attempt to sell off Air India. One development that may help the sale is Non-Resident Indians (NRIs) are permitted to own up to 100% of the two airlines.
