The government of New Delhi has all but given up on the possible resurrection of India's national carrier Air India. Government officials announced on Monday that it would be selling its entire stake in the debt-crippled airline operator, its second attempt to unload its stake after a previously failing to secure bids.
Air India currently owes more than $8 billion to various creditors. The massive amount of debt has managed to cripple the company. While it attempts to slowly pay off its debts, the company has been struggling to pay its employee's salaries and even buy fuel for its airplanes. Regulators have warned the company that it could be forced to shut down unless a buyer purchases its shares.
The country's civil aviation ministry formally released a document to the public, opening bids to purchase a 100 percent stake in Air India. According to the document, the bidding process will officially end on March 17, after which bid submissions will no longer be honored. Interested buyers will have to assume the company's standing debts of around $3.26 billion. Government officials clarified that it still wants the company to be under the hands of an Indian entity.
The fall of the country's national carrier has been attributed to the rise of low-cost rivals, which have slowly eaten away its market share. Air India, which was founded in 1932, previously held a monopoly in the country's air travel sector. The airline was popularly called the "Maharaja of the skies" during its peak. Unfortunately, over the past decades, the company has been hemorrhaging cash in its futile attempt to compete with newcomers and global players.
In the initial attempt to find a buyer for the company's shares last year, India's aviation ministry had threatened to close down the company if it was not immediately privatized. This was following Air India's incapacity to pay its suppliers and its financial obligations. In August last year, state-run oil companies officially ceased all fuel deliveries after the company failed to make timely payments.
Most fear that Air India may suffer the same fate as its rival Jet Airways, which had officially gone bankrupt last year. The company's downfall could further put added strain on the already struggling Indian aviation sector.
Air India has so far been kept aloft through the support of the government. In 2012, the company was granted a $4.2 billion 10-year bailout under Prime Minister Narendra Modi's campaign to divest money-losing assets. Despite the bailout, the airline still wasn't able to recover and instead racked up further debts.
