Air India Continues to Face Hurdles as Divestment Process Moves Further
Adding to the long-standing hurdles to the proposed privatization, oil companies ceased the supply of fuel to Air India’s jets across six stations in August 2019. Cash-strapped Air India has a debt of Rs 54,000 crore, among which Rs 5000 crores is the default to oil companies. According to an article by Quartz, the airline is making daily payments for the fuel, but it is unable to make the payment pending in lumpsum. The oil marketing companies have sent an ultimatum to Air India, asking to clear the bills. The deadline for payment is due in three days, on October 18, 2019. Also Read: Air India Takes Measures To Resolve Fuel Payment Issues With Oil PSUs The latest issue popped up was the mass resignation from 120 pilots of Air India Airbus A320 on the grounds that the airline has not hiked their salaries nor has offered their promotions. Amid all such issues, there is a section of Air India’s union opposing the ‘disinvestment process’, the Quartz report detailed. Air Corporation Employees Union (ACEU), the largest union in Air India, primarily comprising of non-technical staff, has said that it will unitedly oppose the move of privatization. Air India has called for a meeting with the union heads today to address the issue. Financially, Air India suffered net losses of Rs 8,400 crores in FY 2019. The factors attributed to the loss are high aviation turbine fuel prices, currency depreciation, debt servicing expense, and also the closure of Pakistan airspace. The closure of airspace resulted in high cost for the airline as the operations to Europe, US and Gulf from India were majorly impacted with this move. The travel time increased by 2-4 hours as airlines had to make an extra fuel-stop. The official count of Air India’s loss due to this issue was estimated as at more than Rs 500 crores. Also Read: Air India Holding On to Rs 2,500 Crore Bank Guarantee from the Government, Could Use it for Future Loans Air India also ended up hurting its brand image recently, in an issue where it served omelette with eggshells to a Member of Parliament on its Pune-Delhi flight. In another incident, the airline suspended its regional director for the eastern region for allegedly shoplifting in the duty-free area of Sydney airport. Other suspensions were reported for a few pilots who had physical/verbal altercations with the crew members before the take-off. Overall, Air India seems to be on its last leg. The Government is prepared to sell its stake in the airline, and the Expression of Interest could be invited by the end of October 2019.
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