Air India Chairman Quashes Airline Shutdown Rumours

The chairman of the embattled national carrier, Air India, has moved to quash rumors of the airline’s shutdown. Ashwani Lohani, chairman and managing director of Air India, called the rumors ‘baseless’ in comments he made online over the weekend.

The Chairman and M.D. of Air India has denied rumors the airline was shutting down. Photo: Tom Boon / Simple Flying.

An about-face for the chairman and M.D. of Air India

Mr Lohani’s comments were picked up by CH-Aviation. In his online comments, Mr Lohani strikes a bullish tone and has moved to placate concerns amongst passengers and suppliers.

“Rumours reg[sic] Air India shutting down or closing operations are all baseless.

“Air India would continue to fly and also expand and there should be no cause for concern whatsoever to travellers, corporates or agents. Air India the national carrier is still the biggest airline of India.”

You can see Mr Lohani’s Twitter feed here.

Mr Lohani’s comments on the weekend were a big shift from his position last month. Photo: Tom Boon / Simple Flying.

These online comments were made four days ago on Saturday, 4 January 2020. As watchers of Air India’s recent travails well know, a lot can happen in four days.

It is also a swift about-face from his position just last month, In December 2019, Mr Lohani wrote to India’s Civil Aviation Ministry, saying the existing financial situation at the airline was untenable.

“It also needs appreciation that the overall financial situation is grossly untenable and the airline may not be able to sustain physical operations in the absence of immediate government intervention and support that we have been repeatedly requesting for in the recent past.”

The Indian Government is moving swiftly

With haste rarely seen within the Indian Government, a Group of Ministers (GoM) meeting headed by Amit Shah, Union Home Minister, approved the Expression of Interest (EoI) as well as the share purchase agreement for Air India’s privatization yesterday, Tuesday, 7 January 2020.

The EoI and the share purchase agreement will be issued this month. Advertising is expected to begin within a fortnight.

Subsidiary Air India Express is going as part of the wider Air India sale. Photo: Ami2003 via Wikimedia Commons.

It follows the Air India Specific Alternative Mechanism (AISAM) approving the re-initiation of the process for the government’s sale in Air India. Included in the sale is Air India Express and Air India’s stake in joint venture AISATS.

A debt restructuring scheme and voluntary retirement scheme were also approved.

A concerted effort to sell Air India

Having already taken a considerable amount of debt off Air India’s books, the GoM meeting approved another Rs 20,000 crore to be shifted onto a holding company’s books. This is an attempt to make Air India more attractive to potential buyers. Yesterday, an Indian Government official said

“An in-principle approval has been given to hive off a portion of additional debt and some liabilities like dues to oil companies and airport operators as well as pending salary dues and benefits to permanent and retired employees.”

At its nadir, Air India has some Rs 58,000 crore worth of debt. At the end of 2019, Air India is said to have had some Rs 28,000 crore worth of assets and liabilities estimated at Rs 22,000 crore. These liabilities are mostly amounts owing to suppliers like oil companies and airports in addition to short term capital loans.

Air India has come a long way since its glory days. Photo: Jose Luis Celada Euba via Wikimedia Commons.

This will be the third time India has attempted to sell off Air India in whole or in part. The last attempt was in 2017 and the EoI attracted no bidders. This time around, the roadshow has gone to Mumbai, Singapore and London. Groups such as IAG, IndiGo, Vistara, AirAsia India, Temasek, KKR, and Warburg Pincus have attended presentations.

Things move pretty fast at Air India these days. It’s clear the Indian Government is making a big effort to both sell the airline and to keep it operating over the longer term. Whether they have more success than previous efforts to offload the airline, time will tell. One thing one could be fairly sure about, whether Air India is sold or goes under, Mr Lobani along with the rest of Air India’s upper echelons, will soon be looking for a new job.