India Markets open in 5 hrs 21 mins

Air India’s journey from Maharaja to being cash-strapped; how state-run airline reached here

FE Online
air india, BPCL, IOC, hPCL, ATF supplies,  public distribution system, Ujjwala scheme, latest news on air india

As the government-run carrier Air India struggles with cash and payment dues, top fuel suppliers have cut off its fuel supplies at six airports in India. The company, which reels under a cash crunch, owes Rs 4,500 crore as payment dues to three state-owned fuel firms and has been deferring the payments for the last seven months. The once called Maharaja of Indian aviation, Air India is now unable to “handle the huge debt service liabilities,” PTI quoted the airline’s spokesperson as saying. According to media reports, the airline does not even have money to pay its employees beyond October. Air India is the second major airline in India that has been facing financial turbulence for some time now. Earlier, Naresh Goyal-founded Jet Airways was forced to shut down operations as it failed to clear dues worth over Rs 8,500 crore to creditors. 

What went wrong for Air India

The debts for Air India have been mounting and now, with over Rs 58,000 crore to be paid, the government is trying to divest the airline. After an unsuccessful attempt to sell 76% stake of the airline in 2018, the government revealed a renewed plan to privatize it in the Budget 2019. However, over a dozen unions of Air India criticized the government’s plans. According to media reports, an October deadline has been set by the government for the completion of the privatization process. 

Currently, Air India has about 12% market share of the domestic aviation sector which is led by IndiGo. Of the total number of passengers carried in July 2019, Air India had 14% of passengers share. 

A glimmer of hope?

However, despite the turbulence at the airline, an Air India spokesperson said that the situation is turning for the company as it inches towards better profit. "Our financial performance, however, this fiscal is very good and we are moving towards a healthy operating profit. The airline despite its legacy issues is performing very well," news agency PTI quoted the person as saying.