Air India debt unsustainable, Arvind Panagariya
23 June 2017
Air India's debt level is "simply not sustainable" and government action on the airline's future course is likely within six months, Niti Aayog vice chairman Arvind Panagariya said on Thursday.
The government, which directly and indirectly caused heavy losses to the national carrier for so long, is now looking at various options, including possible privatisation, to get it off its shoulders.
"I think really where Air India stands now, it is almost a matter of existence. The debt is already about Rs52,000 crore; we are adding Rs4,000 crore debt every year so this is simply not sustainable," Panagriya said.
"In the end, I think the airline does need to go with management in the private hand,." Panagariya said in an interview to CNBC-TV18.
The Niti Aayog chief''s statement comes amidst ongoing discussions on the future course of action for Air India.
Panagariya further said that something should be happening this year with respect to Air India.
"We are in June, so we have six months (more) this year. You know, actually something happens or not depends on buyers but from the government side, we should see some action in the next six months," he added.
Noting that successive governments recognised the problems with the airline but failed to act on them, Panagariya said Prime Minister Narendra Modi is bolder and more decisive.
Air India is surviving on Rs30,000 crore bailout package extended by the previous UPA government.
Air India, which has a 105-strong fleet and deep international networks, also has acquisition-related debt of Rs20,000 crore and another Rs32,000 crore of working capital debt.
Recently, finance minister Arun Jaitley had said the aviation ministry has to explore all possibilities "as to how the privatisation of Air India can be done".
On Wednesday, sources said Tata group was evaluating options on buying stake in the airline.
Air India traces its roots to Tata Airlines, which was formed way back in 1932. Set up by Tatas, the carrier was made a public company and was rechristened as Air India. Later, it was nationalised.
Tatas had tried to acquire stake in Air India earlier as well.
Meanwhile, some reports said besides Tata some other airlines are also looking to acquire stake in the loss-hit national carrier.
Sources close to the airline said that initial meetings had taken place with possible buyers, including the Tata group.