Indigo interested to buy out Air India’s international services

The Cabinet on Wednesday gave its in-principle approval for divestment of Air India.

The Dollar Business Bureau 

Soon after the Cabinet cleared the consideration of Air India's disinvestment, leading domestic airline IndiGo has shown its willingness in buying the flight operations of the national carrier, specifically overseas services. 

IndiGo President Aditya Ghosh sent a letter to the Minister of Civil Aviation Gajapathi Raju expressing interest to buy out the international services of Air India as the airline looks to spread its operations overseas. 

“Kindly treat this letter as our expression of interest in acquiring the international airline operations of Air India and Air India Express. Alternatively, we are equally interested in acquiring all of the airline operations of Air India and Air India Express,” said Ghosh in the letter. 

IndiGo is a leader in the domestic market with a share of more than 41%. 

The budget carrier presently covers seven overseas destinations, mostly in the Middle-East including Dubai, Doha, Muscat, Sharjah, apart from Bangkok, Singapore and Kathmandu. 

However, Air India has a much wider international presence with its operations covering destinations in Australia, Asia, Europe, the US and Middle-East. 

"Many other private players, both domestic and international, have approached us. The first formal expression of interest is from IndiGo,” Minister of State for Civil Aviation Jayant Sinha told the journalists. 

Earlier in the day, Civil Aviation Secretary R N Choubey, said, “IndiGo has written a letter with an unsolicited expression of interest (EOI) in the divestment procedure of Air India.” 

The national carrier has a huge debt of Rs.52,000 crore and it is surviving on Rs.30,000 crore bailout package of cleared in 2012. 

Choubey further said that the current management of Air India has been able to bring about improvement in the carrier. From the operating profit of Rs.105 crore in 2016, now the airline’s unaudited operational profit is Rs.220 crore. 

He said that the losses of airline were down to Rs.3,300 crore from Rs.3,900 crore. 

“Now there is an airline worth looking at and it is a cash positive airline operationally. Once we handle the issue of debt it is a valuable airline,” he said. 

If IndiGo airline has approached us "post-haste", which means that the market considers it as an asset of great value, he added. 

The Cabinet on Wednesday gave its in-principle approval for divestment of Air India. It also created a group headed by Finance Minister Arun Jaitley to work upon the modalities of stake sale in Air India.

The Dollar Business Bureau - Jun 30, 2017 12:00 IST