Air India on its last legs

Air India to shut down in June if no potential buyer

The former aviation giant, Air India has found itself on the ropes once again, after a dry spell of buyers for the debt riddled company. As per the official statement released by a senior official in the company; the struggling company might be forced to shut down by June if no buyer was to be found. Piecemeal arrangements could not shoulder the debt burden of the company for long. 

Additionally, officials also conveyed concerns regarding the requirement of more funds to restart operations for the 12 grounded narrow body planes.

The Airline currently shoulders a massive debt of 60,000 crore INR with the government still working on modalities for disinvestment. Company officials fear that the Airline would meet the same fate as Jet Airways if no potential buyer was to appear. The month of June was slated as the date of up to which, the company could be sustained.

The government had washed its hands off the Airline and had refused to provide any funds for their sustained business, essentially leaving the business to fend for itself. Thus, the company has been in dire straits after being unable to shoulder their massive debt, thereby looking towards the market for potential buyers. They had been keeping themselves afloat based off piecemeal arrangements but they will soon hit their limit by June, next year leading to the need to shut down the company if no buyer is found before the specified date.

As of FY19, Air India's net loss was estimated to be 8,556.35 crore INR.

According to government sources, the Centre had infused funds amounting to 30,520 crore INR from financial year 2011-12, till December this year.

A 30,000 crore INR financial assistance over a period of 10 years had been approved by the UPA regime back in 2011 and an additional 2,400 crore INR had been sought as a mop up fund as well in order to meet operational requirements. However, the government was only able to provide 500 crore INR from the required amount.

An official, under the condition of anonymity revealed that the need for a buyer was urgent. Although operations were being continued and managed without much issues currently, they could only sustain the Airline for a few more months at most before being forced to shut down. 

Jet Airways had been forced to shut down after 25 years of full service flights due to cash crunch and now Air India is expected to follow suit with a total debt of 60,000 crore INR of which, around half has been taken out and placed under the special purpose vehicle, Air India Assets Holding.