IndiGo confirms interest in troubled Air India's global operations

  • IndiGo confirms interest in troubled Air India's global operations

IndiGo confirms interest in troubled Air India's global operations

The airline founders Rahul Bhatia and Rakesh Gangwal said IndiGo is interested in Air India's worldwide operations only, but they were not sure whether the government will be ready to sell only a portion of it to them.

Budget airline operator IndiGo today sought to allay investor fears about overstretching its balance sheet in its attempt to acquire the beleaguered national carrier Air India, while outlining the benefits that would accrue to it after the buyout of only the latter's' global operations. "It would provide a rapid entry into restricted and, in some cases, closed worldwide markets".

Last month New Delhi said it was hoping to sell a stake in Air India, which has long struggled to compete with privately-owned rivals and has amassed some $8 billion (7 billion euros) in debts. Air India, on the other hand, has the largest domestic and long-haul fleet of 140 planes in the country and flies to almost 41 worldwide and 72 domestic destinations.

As the Indian government announced its plans to disinvest from the national carrier, Air India; IndiGo was the only private airline that expressed its interest in the airline, however, the true intentions were clarified only yesterday.

Even without any deal with Air India, IndiGo plans to enter the long-haul worldwide market, Rakesh Gangwal, co-founder of IndiGo, said.

Bhatia added that IndiGo does not have the "ability or the desire" to take on debts or liabilities that cannot be supported by a standalone restructured worldwide operation of Air India.

Efforts to privatise the airline - a huge drain on state coffers - have foundered in the past and experts said the government would have no choice but to write off its massive debt if it was to attract a buyer. American Airlines followed the same model in buying Trans World Airline's London routes, providing a proven road-map for such an approach, he said. If acquisitions of only inter national operations are not possible, IndiGo has offered to acquire all operations of AI and AI Express. It has constituted a five-member ministerial panel, headed by finance minister Arun Jaitley, to work out the details. Though Prime Minister Narendra Modi's administration has given its consent, it has yet to decide on the contours of the sale - especially the fate of the debt.

In the analyst call, Bhatia said that IndiGo is not looking to acquire all of Air India and that its focus is on Air India's overseas operations. It has not turned profit in 10 years, since at least the year 2007.

IndiGo has long advocated a single-aircraft-type model to bring costs under check, and has ordered 530 of Airbus SE's A320 family jets, becoming one of the world's top customers for the Europe-based planemaker.

Air India has guzzled up taxpayer money over and over again but to no effect.

Air India, which is known for its Maharajah brand icon, traces its roots to Tata Airlines, founded in the 1930s by the then-patriarch of Tata Group, J.R.D.