The Air India deadline has been pushed again amid India’s crippling second wave of cases. The continuing pandemic also means that the price of the flag carrier is expected to fall as losses mount and assets decline in value. Let’s find out more about the timeline and price of the sale.
According to BusinessLine, bidders Tata Group and SpiceJet CEO Ajay Singh received access to key Air India details in the middle of April. The two will now place financial bids for the airline based on the carrier’s assets and current debt. However, government officials now estimate that the process won’t be complete until September.
September is a far cry from the government’s previous hope of completing the sale by late May or June. However, the market has also significantly changed since the previous timeline was under discussion. India’s second wave of COVID-19 has been severe and crippled the beleaguered aviation industry once again.
The last few weeks have seen cases surge in India, with the 7-day average now at over 320,000 daily cases. The sudden rise in cases and deaths has overturned the domestic aviation recovery, with passenger numbers down over 50% from their peak in early March. Considering all of this, the value of Air India may have changed as well.
According to government sources in early April, seen in Moneycontrol, the asking price of Air India is expected to be substantially lower than the pre-pandemic rate. While this was always expected, the second wave has further devalued some of Air India’s key assets: its landing slots, routes, and fleet.
The impact of the second wave on Air India cannot be underestimated. In just one week, the flag carrier has been banned from flying to countries like the UK, Canada, Germany, the UAE, Oman, and many more. Along with these profitable international routes, passenger numbers have been falling domestically too, further impacting the carrier.
Moreover, the airline also racked up losses of ₹9,779 crores ($1.3 billion) in 2020, adding more to the carrier’s debt. These factors combined will see Air India’s value drop sharply compared to the start of 2020. However, these changes are more or less comparable to valuation drops other airlines have seen due to the pandemic.
Despite all the troubles faced by the government in trying to privatize Air India, they remain steadfast in their support for the plan. The reason for this is clear: India is no longer willing to prop up the debt-ridden airline. While the price might be lower, the government is still happy to get the airline off its books as soon as possible.
While the Air India sale might be further delayed, it remains highly likely to be completed in the coming year.
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