Air India has been struggling with mounting debts and tough domestic competition. Over 30,000 employees and poor revenues on foreign routes are the main reasons cited for its mounting debts. It has been in the red since the merger of then Air India and Indian Airlines in 2007. The merged entity proved too big to manage, and a large part of the new company’s revenue went towards paying its bloated workforce.
In April, MoS Mahesh Sharma had said that the government plans to bring down its stake in Air India to below 51%. The government mulled over lowering its stake in the airline by asking banks to convert their loan into equity.
Ironically, 2016 is the first year since 2007 that Air India made a small operational profit of Rs 80 million. Air India is so encouraged by its improved financial situation and high growth potential of the domestic aviation market, that it is putting in plans to expand its fleet by another 100 aircraft in the next four years. Although the reasons for it turning operationally profitable in FY16 and reducing its losses by almost half is largely due to low jet fuel prices and government bailout money.
"I said we expect the turnaround to happen not later than 2018-19. It is possible to bring about change by running the airline like a business entity. A six-year plan is a long time to predict, but a three-year period can be foreseen" Air India, CMD, Ashwani Lohani, had earlier told media.
For the past several years, the airline has been criticised for wasting taxpayers’ money. Now, the Union civil aviation minister Ashok Gajapati Raju agrees to it.
“It is a nice airline. I like Air India but I can’t commit taxpayers’ money for eternity. That is not done,” Raju told PTI.
The Union civil aviation minister has said that Air India's books are so bad that none will come to invest or purchase it, if offered the stake to private players.
During an interaction with the media, the minister claimed that the records of Air India are "so bad that nobody might come to invest or purchase it even if it is put on sale by the government". However, at the same time, public money can not be pumped into the airline for ever, he said.
Question on everyone's mind is, "Will Air India’s books will remain bad for many more years despite its operational performance improving?"