Air India posts record loss of Rs 8,556 cr in FY19, as govt looks to sell airline

According to Civil Aviation Minister Hardeep Singh Puri, Air India’s accumulated losses have soared to 69,575.64 crore in the past decade.
Air India posts record loss of Rs 8,556 cr in FY19, as govt looks to sell airline
Air India posts record loss of Rs 8,556 cr in FY19, as govt looks to sell airline
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The government may find it tougher to find a suitor for the ailing national carrier Air India as the company has continues to post higher losses. As per the information shared with the Parliament by the Civil Aviation Minister Hardeep Puri, the airline has posted a loss of Rs 8,556.35 crore in the financial year 2018-19, much higher than the loss of Rs 5,348.18 crore it recorded the previous year.

This, despite some favourable winds in the Indian context like the shutting down of Jet Airways and the prices of aviation turbine fuel (ATF) following a relatively steady curve.

With the above loss figure, the airline is sitting on accumulated losses of Rs 69,575.64 crore from the last decade. Air India was merged with Indian Airlines in 2007-08 and there has not been a single year when the airline made any profit. It has been loss-making all the way. This has led experts in the industry to conclude that the government is incapable running a competitive airline and privatization is the only answer.

The challenge for the government, however, will be to find a buyer with all the debts the airline is carrying on its books. The figure of debts owed by Air India is said to be in the region of Rs 58,000 crore. The current liabilities are being quoted at Rs 22,000 crore, of which ₹5,000 crore is on account of fuel purchases owed to the oil companies; about Rs 5,000 crore is payable to the various airport operators for services rendered, including aircraft parking fees etc. Another Rs 8,000 crore would be the value of tickets sold for flights in advance and would be treated as a contingent liability.

Air India operates its flights to 31 countries covering 43 overseas destinations and within the country, it has its flights landing and taking off from 55 airports.

Minister Puri has already gone on record in the Parliament itself earlier that if the government cannot sell off the airline, it will shut down its operations since the government is not in a position to keep funding the losses year after year.

In order to make it easier for the bidder, the government has already shifted part of the debts of Air India to a separate holding company. The prospective buyer will look at the tangible assets like the aircraft, the landing permits and the slots in the airports and the debts left in the airline will match these assets.

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