dtw2hyd
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 10, 2018 11:09 am

AI has no money to pay salaries, but VT-ALV arrived on time at Fort Worth for $180 Million Dokhla Protection Suite refit.
 
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 10, 2018 1:36 pm

May salaries at AI will be paid on June 15th.
I couldn't imagine the stress of a paycheck being missed. Oh, I can without a paycheck, it is the stress that imposses and how unfair it is to employees, in particular junior employees. AI cannot stay a government asset and function (no government companies make profits in the long run, they just have it too easy). The reality is India's aviation needs are being well met by Indigo, Jet, Spicejet, GoAir, Vistara, and AirAsia. It is time to cut the apron strings.

https://www.ndtv.com/business/air-india ... fa-1864827
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 10, 2018 2:42 pm

dtw2hyd wrote:
AI has no money to pay salaries, but VT-ALV arrived on time at Fort Worth for $180 Million Dokhla Protection Suite refit.

Dammit, now I'm hungry for Indian food!
Wake up to find out that you are the eyes of the world
The heart has it's beaches, it's homeland and thoughts of it's own
Wake now, discover that you are the song that the morning brings
The heart has it's seasons, it's evenings and songs of it's own
 
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 10, 2018 3:36 pm

BawliBooch wrote:
"T" are not the crony of choice. "T" are being fixed to keep them in line and prevent them from funding the resurgent opposition camp.

The chosen cronies are the Bhatia's & Ajay Singh.

2 men who can just dream of flying to distant places but can't order a single WB. What would've been the future of AI had it been under any one of them.?
9W must be declared as India's national airline. They will indirectly fulfill JRD's vision!!
 
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 10, 2018 3:38 pm

AI is basically AZ on steroids!
 
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Re: Air India Privatization, by June-Failed sale. What next?

Tue Jun 12, 2018 7:50 pm

Meanwhile, the government is likely to infuse another Rs 32 billion in the state-owned airline. The airline has already received more than Rs 260 billion under the bailout package announced in April 2012. The infusion became essential after three banks from the lenders’ consortium refused to extend the line of credit to the airline.
Why is it every time I turn around AI is getting more money to sustain its operations.
“The yearly equity infusion from the government was cut down and with banks refusing to lend, the finances have come under stress. We have written to the government, asking for restoration,” the official said.
Banks refusing to lend under commercial terms.

The below link seems to think just selling 100% of AI (no government share) is sufficient. I question if AI's assets are worth what they were six months ago prior to the drop in RASK and increase in oil (CASK).


https://www.business-standard.com/artic ... 368_1.html

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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 7:44 am

News reports in Indian media suggest government may offer 100% of Air India and throw in some prime real estate as sweetener for the deal.

Good to see the government not backing down from the sale despite the debacle. Also disproves the crazy political theories of Anet armchair analysts.
Air India is a national embarrassment
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 10:43 am

LOL. One thing consistent is misinformation campaign by the government of India. Indian media willingly participate in this campaign.

Throughout the process aviation secretary told multiple suitors were lined up to buy AI, in reality, other than Indigo, no one expressed interest.

74% percent was one of the several sticking points. Few more poison pills in the document must go.

Keeping workforce for 1 year. Why should the buyer be forced to keep contract workers for 1 year, let alone permanent employees?
Running AI as a separate entity.
IPO within 3 years?

Also, why can't GoI distribute debt to all entities, offer them separately and let interested parties buy al-a-carte?
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 1:33 pm

dtw2hyd wrote:
LOL. One thing consistent is misinformation campaign by the government of India. Indian media willingly participate in this campaign.

Throughout the process aviation secretary told multiple suitors were lined up to buy AI, in reality, other than Indigo, no one expressed interest.

74% percent was one of the several sticking points. Few more poison pills in the document must go.

Keeping workforce for 1 year. Why should the buyer be forced to keep contract workers for 1 year, let alone permanent employees?
Running AI as a separate entity.
IPO within 3 years?

Also, why can't GoI distribute debt to all entities, offer them separately and let interested parties buy al-a-carte?


As I posted on another forum - now that the country knows AI is just lipstick on a pig, maybe the government can finally offer a deal that makes economic sense to a buyer. The opposition and AI unions / Communist party can't claim the current govt is giving away the family jewels. If they end up selling AI and they don't get huge backlash, then these games might actually be worth it.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 2:05 pm

CaliguyNYC wrote:
..
As I posted on another forum - now that the country knows AI is just lipstick on a pig, maybe the government can finally offer a deal that makes economic sense to a buyer. The opposition and AI unions / Communist party can't claim the current govt is giving away the family jewels. If they end up selling AI and they don't get huge backlash, then these games might actually be worth it.


Assuming GoI is sincere, can you walk us through few assets and debt combination numbers that make economic sense to any buyer.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 2:15 pm

CaliguyNYC wrote:
dtw2hyd wrote:
LOL. One thing consistent is misinformation campaign by the government of India. Indian media willingly participate in this campaign.

Throughout the process aviation secretary told multiple suitors were lined up to buy AI, in reality, other than Indigo, no one expressed interest.

74% percent was one of the several sticking points. Few more poison pills in the document must go.

Keeping workforce for 1 year. Why should the buyer be forced to keep contract workers for 1 year, let alone permanent employees?
Running AI as a separate entity.
IPO within 3 years?

Also, why can't GoI distribute debt to all entities, offer them separately and let interested parties buy al-a-carte?


As I posted on another forum - now that the country knows AI is just lipstick on a pig, maybe the government can finally offer a deal that makes economic sense to a buyer. The opposition and AI unions / Communist party can't claim the current govt is giving away the family jewels. If they end up selling AI and they don't get huge backlash, then these games might actually be worth it.

The GoI made a mistake not selling AI soon. RASK is dropping and CASK climbing (oil). Due to oil and India's high fuel taxes, the value of AI's aircraft have fallen. Boeing being agressive on 787 sales after cutting 787 production costs isn't helping either.

The rules must change. AI must be integrated quickly to cut costs. Assets must be used at industry norms and if past economic life in India's high tax environment (fuel, parts), sold off.

Right now a well run airline in India pays 40% of revenue to fuel for domestic flights and more for international. So for India,vdue to those taxes, they should sell off aircraft early.

I find it so ironic that the US3, G4, and B6 are all potential buyers (thanks to US fraking holding a slightly better line on US jetfuel pricing).

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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 4:11 pm

dtw2hyd wrote:
CaliguyNYC wrote:
..
As I posted on another forum - now that the country knows AI is just lipstick on a pig, maybe the government can finally offer a deal that makes economic sense to a buyer. The opposition and AI unions / Communist party can't claim the current govt is giving away the family jewels. If they end up selling AI and they don't get huge backlash, then these games might actually be worth it.


Assuming GoI is sincere, can you walk us through few assets and debt combination numbers that make economic sense to any buyer.


I guess it would depend by each buyer - but basically what you and others have said before. You need 100% ownership with no meddling and combining with current ops if purchased by an airline. Keeping the brand and some % of employees for a certain period is fair (but some initial layoffs are also fair - this is like any union business that is merged - look at US airlines). I think a reasonable amount of debt based on the airplanes/assets (and also based on age of them) is totally fine (where reasonable is industry standard). Remember the buyer could have the planes sold and leased back as well (all concurrent with the deal). Net net, I don't think we need to come up with the ideal, as experts can figure that out. I think we can all agree that AI definitely is worth something. Let the market decide and move the F on.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 6:01 pm

CaliguyNYC wrote:
dtw2hyd wrote:
CaliguyNYC wrote:
..
As I posted on another forum - now that the country knows AI is just lipstick on a pig, maybe the government can finally offer a deal that makes economic sense to a buyer. The opposition and AI unions / Communist party can't claim the current govt is giving away the family jewels. If they end up selling AI and they don't get huge backlash, then these games might actually be worth it.


Assuming GoI is sincere, can you walk us through few assets and debt combination numbers that make economic sense to any buyer.


I guess it would depend by each buyer - but basically what you and others have said before. You need 100% ownership with no meddling and combining with current ops if purchased by an airline. Keeping the brand and some % of employees for a certain period is fair (but some initial layoffs are also fair - this is like any union business that is merged - look at US airlines). I think a reasonable amount of debt based on the airplanes/assets (and also based on age of them) is totally fine (where reasonable is industry standard). Remember the buyer could have the planes sold and leased back as well (all concurrent with the deal). Net net, I don't think we need to come up with the ideal, as experts can figure that out. I think we can all agree that AI definitely is worth something. Let the market decide and move the F on.

What you propose is reasonable except debt on assets. AI has borrowed as much as possible on assets, so there is too much debt to attract bidders. Allow bidders to bid on debt.

The reality is a failed auction reduces the value of anything (e.g., perceived brand value). The accounting is too opaque to accept unlimited liability.

Too few buyers for the whole airline. Break it into chunks as was first proposed. Any chunks that do not sell may be addressed later.

However, if this is delayed until Indigo and Vistara are significant international airlines from India, no one will bid. Personally, I think the process will remain so political as to scare away buyers. All it takes is for members of parliament to start making speeches on making the buyers justify job cuts to scare them away.


Watching AI fade away is even more facinating than PanAm. :(

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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 6:26 pm

AI has a bloated workforce is a myth. Not sure Unions are spinning this to scare buyers (or) buyers are spinning this expecting a firesale.

If this was any other airline with good PR spending, they should be spinning this

Air India (120 planes)
Weekly Domestic Departures - 2330
Weekly International Departures - 373
Permanent-11,214 (Retirements '19-'24: 1,001+748+806+817+845=4,217)= 7000 by 2024
Contract-2,913 (Can be terminated anytime)
Seconded-2,661 (From other GoI entities, can be sent back)
Casual labor-2,155 (Can be terminated anytime)
Others-549 (From other GoI entities, can be sent back)

Air India Express (23 planes)
Permanent - 96
Contract - 1,033

By Grade
Executive (AGM and above)
Pilots 194
Engineers 1
Flight Operations Officers 55
General Category Officers 482

Officers (AM to Senior Manager above)
Cabin Crew Officers 851
Flight Operations Officers 136
General Category Officers 3,591

Workmen
Line Pilots 1,642
Cabin Crew 3,085
Technicians 57
Clerical/ Unskilled 6,504
Foreign Clerical/ Unskilled 236
 
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Re: Air India Privatization, by June-Failed sale. What next?

Wed Jun 13, 2018 10:10 pm

Buyers don't have until 2024 to start paying paychecks.

3600 "General Category Officers" says it all. How many mid-level managers (outside of flight operations) do you think are employed at each of the US majors, each of which has 6 to 8 times the number of mainline aircraft as AI?
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 12:02 am

Facinating link on how competitive the Indian airline market is. The RASK is half the USA.

My take, cost control is the most important factor in India.

https://mobile.reuters.com/article/amp/idUSKBN1J917X
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 1:03 am

dtw2hyd wrote:
AI has a bloated workforce is a myth. Not sure Unions are spinning this to scare buyers (or) buyers are spinning this expecting a firesale.

If this was any other airline with good PR spending, they should be spinning this

Air India (120 planes)
Weekly Domestic Departures - 2330
Weekly International Departures - 373
Permanent-11,214 (Retirements '19-'24: 1,001+748+806+817+845=4,217)= 7000 by 2024
Contract-2,913 (Can be terminated anytime)
Seconded-2,661 (From other GoI entities, can be sent back)
Casual labor-2,155 (Can be terminated anytime)
Others-549 (From other GoI entities, can be sent back)e

Air India Express (23 planes)
Permanent - 96
Contract - 1,033

By Grade
Executive (AGM and above)
Pilots 194
Engineers 1
Flight Operations Officers 55
General Category Officers 482

Officers (AM to Senior Manager above)
Cabin Crew Officers 851
Flight Operations Officers 136
General Category Officers 3,591

Workmen
Line Pilots 1,642
Cabin Crew 3,085
Technicians 57
Clerical/ Unskilled 6,504
Foreign Clerical/ Unskilled 236

Why do you assume retiring employees won't be replaced? Your temporary employees are half the numbers of other sources. What is your link? Please see my prior posts that agree on full time employees, but not on contractor numbers.

Air India has the right number of pilots if they were flying as intensely as the competition.

2330 weekly departures is 333 daily or 2.8 per aircraft. That is low. Really low. AI needs to perform regional tags, say get into the Europe to Thailand, Malaysia, and Indonesia markets.

Prior links were 27,000 employees with contractors or 225 employees per aircraft. Your numbers are 160 per aircraft. Indigo is at a hundred per aircraft. A premium long haul taking care of everything should be at 130 or so.

I'm afraid AI is overstaffed from 22% to 73%.

But our opinions do not matter. India is a low premium market that penalizes high cost operations.

RASK is dropping. More competition on mid-haul international is coming (Europe and China). CASK is climbing. I see competition working hard to reduce CASK. e.g., SpiceJet had quite the turnaround and the MAX will really help them.

What needs to happen is AI sold without restrictions. If the staff is efficient, no worries. If bloated, that will be addressed. I do not believe Air India will be able to demand government handouts and loan guarantees for much longer. I also believe if the try a pure stock sale, a la Alitalia's investors will have nothing within a few years. At that point it would be able to fail without government obligation.

No government entity controls costs well. As my above post notes, India travel is all about cost control.

Eh... Indigo, SpiceJet, GoAir, Jet, and AirAsia will receive so many aircraft over the next 5 years, our discussion won't matter. India travel will be transformed.

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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:31 am

E & Y published preliminary information memorandum is the source.

Employee cost is 12% of revenue.

27,000 is 2012 number, now it is 11,000 employees + contractors.
Buyer can offer buyouts to 4,000 on day 1 bringing it down to 7,000.
Buyer can terminate all contract employees on day one.

WFR is not the issue, WFR when GoI's being a part owner is the issue.

Domestic Departures
70(of 75 NB, assuming 5 are on international routes) aircraft doing 333 flights in a day. 4.75 per frame.
333÷70 = 4.75 per frame

International Departures
373 Departures are handled by Air India within India, 20 are fifth freedom, 373 by remote GHAs = 766, 43 WBs + 5 NBs(guess)
766÷7÷48 = 2.28 per frame (EK 360 departures per day, 180 from DXB)

Air India cannot do 3-person ULHs or anything close. DGCA crew rest periods are the highest in the world. Crew rest issues are litigated in courts, unlike some countries.

Air India is an integrated airline, others are skeleton airlines, so you have to include their outsourced contractors.

More than 70% traffic at top 5 Indian airports is handled by AISATS. AIATSL are also GHA, sole GHA at many of the 50+ other airports.

The so-called aviation boom in India is handled by AI subsidiaries.

When a customer outsources in-house IT department to India they usually get 2X to 3X employees on cheap.

At $14/hr a US employee costs $2200 per month without benefits, the same employee costs close to $500 per month in India.

AI employees got a pay rise last in 2006. Last time AI employees took an industrial action was in 2011. Lufthansa employees went on strike 34 times in recent years.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:44 am

AISATS should be split off. Most bidders do not want to buy it, so those employees should be part of another sale.

If the new package is a good deal, Air India will sell and there might even be a bidding war. If the sale fails again, I doubt there will be interest at a fair price for the 3rd attempt. So AI must be offered at what is perceived as a minimum price that is a good deal.

That means the amount of debt taken by the buyer and perhaps even assets must be part of the bid.

I'm not sure why you are parsing the numbers so much. If AI has good metrics, they should publish them as Indigo does out in the press.
Hours per aircraft per day.
Cycles per aircraft per day.
Passengers per employee...

Heck, break out Air India Express.

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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:54 am

lightsaber wrote:
AISATS should be split off. Most bidders do not want to buy it, so those employees should be part of another sale.


Exactly. The days of a one-airline-fits-all are over for the most part. Most airlines dont want to deal with things outside their core competency.

AISATS should be spun off or sold separately.

Finally, if AI was the rockstar that dtw2hyd claims, why are they so far in the red? Something isnt working. It doesnt matter who's fault it is, but repeating this clearly isnt working.
2018 : AUA | CLT | IAH | HOU | DFW | COS | DEN | CLL | ORD | PVG | PEK | PHX | OAK | SFO | SJC | PHL | YYC | STL | DTW | HNL | OGG | JFK | LGA
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 3:56 am

Antarius wrote:

AI was the rockstar that dtw2hyd claims, why are they so far in the red? Something isnt working. It doesnt matter who's fault it is, but repeating this clearly isnt working.

AI the rockstar might become a new a.net meme!

It just isn't working as you note. Why doesn't matter. It is time to end the insanity and break up the company as first proposed.

A rockstar company is profitable.
Air India is not.
What will become of the Maharajah?
It's fate is quite bleak.
Do not post on a.net after putting kids to sleep.
Too tempting to write as good old Suess.

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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 5:22 am

lightsaber wrote:
AISATS should be split off. Most bidders do not want to buy it, so those employees should be part of another sale.

If the new package is a good deal, Air India will sell and there might even be a bidding war. If the sale fails again, I doubt there will be interest at a fair price for the 3rd attempt. So AI must be offered at what is perceived as a minimum price that is a good deal.

That means the amount of debt taken by the buyer and perhaps even assets must be part of the bid.

I'm not sure why you are parsing the numbers so much. If AI has good metrics, they should publish them as Indigo does out in the press.
Hours per aircraft per day.
Cycles per aircraft per day.
Passengers per employee...

Heck, break out Air India Express.

LIghtsaber


Happy to provide data ... In the first quarter 2018 ...

Scheduled flights 39,472
Hours flown 75,604
KM flown 42,198,000
Total Passengers 5,339,966
Total Pass * Km 5,200,187,000
Average load factor 85.0%

Other interesting results

Cancellation rate: 1% (next highest large airline is 0.5%)
Passenger Complaint rate / 10,000 is 1.7 (next highest large airline is 1.2)
Number of unclosed complaints: 54 (every other airline is 0)
On time performance: 76.4% (lowest of major airlines)

http://dgca.gov.in/reports/stat-ind.htm
http://dgca.gov.in/pub/month-stats/2018/airindia18.pdf
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 6:10 am

Objectively India's worst run airline by a mile.
Air India is a national embarrassment
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 8:23 am

Just take it out the back and put it out of its misery like the knackered horse it is.

It's pretty amusing to read people scrambling to excuse/justify AI's endless government subsidies while calling out ME3 for allegedly the same thing. Pot meet kettle. :rotfl:
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 9:49 am

CAG report 2016 which is the official government audit bureau has this to say on number of employees in 2016.

It was pointed out that in
2007 the total staff strength was about 32000 (wide body + narrow body) while the present
staff strength was approximately 20000 (including AIESL & AIATSL). It was also pointed
out that as on 01 November 2015, aircraft to employee ratio of Air India was 1:196 whereas
that of Jet airways was 1:150 that of Indigo 1:102 and that of Spice jet 1:118.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 11:00 am

lightsaber wrote:
AISATS should be split off. Most bidders do not want to buy it, so those employees should be part of another sale.

If the new package is a good deal, Air India will sell and there might even be a bidding war. If the sale fails again, I doubt there will be interest at a fair price for the 3rd attempt. So AI must be offered at what is perceived as a minimum price that is a good deal.

That means the amount of debt taken by the buyer and perhaps even assets must be part of the bid.

I'm not sure why you are parsing the numbers so much. If AI has good metrics, they should publish them as Indigo does out in the press.
Hours per aircraft per day.
Cycles per aircraft per day.
Passengers per employee...

Heck, break out Air India Express.

LIghtsaber


There is no need to break-up. All these are already separate legal entities with separate books. GoI could have offered them al-a-carte but choose to bundle.

AI has two GH entities.
AI-SATS 50:50 JV and is probably the most profitable, Even SATS would take rest of the 50%. SATS(Singapore) gets close to 1000 crores in dividends every year.
AIATSL, without it most airlines and airports wouldn't be operational. Swissport/Menzies is not going to operate an airport with just 5 flights a day.

AIESL is Asia's largest MRO. 31 hangars at 6 MRO locations,2 hubs, 65 line stations, 6000 employees. (Emirates Engineering has 8 hangars at 1 MRO location,1 hub, 3000 employees.)

Why AI cannot be revived. Five main reasons, All 5 are GoI related.
1) 15% on $3Billion Indian PSB held debt (Close to $450 Million dent)
2) 40% on ATF (Foreign carriers pay 0% per international standards)
3) 50% on MX/MRO (Indigo, proud Indian carrier gives all its business to Sri Lanka to avoid taxes/duties)
4) Payments to VVIP aircraft. (AI has to pay $2Million per month for two 77Ws, whether it gets paid or not, read 5)
5) Unpaid VVIP charter invoices by GoI
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 1:46 pm

An airline who cannot even clean their planes properly (in a country with cheap labor) and fixes things with tape, is NOT a rock star by any means. Sell it for Rs1 and move on...
Oh and I hope the new owner files criminal charges against the AI crew that "borrows" things from the AI galley's.
To balance this post - I think AI has actually built a great network out of DEL. Kudos to them for launching nonstops to the US which was sorely needed, opening many new routes (like DEL-ARN), sticking to a DEL hub strategy and joining an alliance. There is value here.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:20 pm

No use in launching a hundred non stops from DEL when none of them make money
Air India is a national embarrassment
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:26 pm

Why not Indigo buy two 77Ws add $580 Million debt, spend $24 Million/year on payments and not get paid for dear leader trips.

AI is not a rockstar, AI is a kid abused by own mom(GoI) and by her boyfriend (Indian PSBs) and everyone says why would mom abuse her own kid or allow her boyfriend abuse.
 
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 2:32 pm

Unrave,
I believe that AI could be profitable from DEL is sold as separate entities (broken up). That said, the process was broken.

Denial of the rock star having issues is preventing reform. Each section must be sold and allowed to fail.

Meh... AI is practically irrelevant for domestic travel and will be soon international. If India lacks the will to reform, it will be a money pit.

No Indian airline could afford to buy all of AI. I do not think anyone wants that much risk. In my opinion, if the company isn't broken up, there will continue to be significant GoI meddling.

At the current estimated cash flow losses, AI will run out of cash again in about six months if they receive 3,000 crore. Now that is a rockstar!

If there is an equity sale, I predict investors will have a very Alitalia experience.

Lightsaber
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 6:17 pm

Looks like AI will be gifted enough money to run for 6 months:
https://wap.business-standard.com/artic ... 299_1.html
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
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scbriml
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 6:26 pm

lightsaber wrote:
Looks like AI will be gifted enough money to run for 6 months:
https://wap.business-standard.com/artic ... 299_1.html


So that's another $470 million for six months, yes?

We are definitely going to provide necessary liquidity and financial resources so that Air India continues to provide world-class customer service to its passengers


Somebody needs to tell him the truth. :rotfl:
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Thu Jun 14, 2018 6:35 pm

scbriml wrote:
lightsaber wrote:
Looks like AI will be gifted enough money to run for 6 months:
https://wap.business-standard.com/artic ... 299_1.html


So that's another $470 million for six months, yes?

We are definitely going to provide necessary liquidity and financial resources so that Air India continues to provide world-class customer service to its passengers


Somebody needs to tell him the truth. :rotfl:

Yes on $470 million. Ouch...

Six months is my estimate on the current cash burn. With declining revenue in India and increasing fuel, I'm probably optimistic on how long the money will last.

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
pg89
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Re: Air India Privatization, by June-Failed sale. What next?

Sat Jun 16, 2018 1:30 pm

IMO, the Government of India should retain only regional operations carried out by Alliance Air as PSO. Everything else can and should be sold off for the sake of Air India itself, if nothing else.

I'm a bit unsure about selling AI off as a single unit as opposed to perhaps splitting it back into AI & IC (essentially separate widebody long haul / narrowbody regional carriers). Judging by SQs recent strategic shift towards an eventual merger with MI, and CX's ongoing re-alignment with KA, I'd like to think that AI & IC are better as a single, seamless giant in the long run, of course provided they are under better management.

At the same time, given the size of the Indian market and the marked service differences within AI & IC post-merger, it might make sense to break them up again and offer them to different sets of prospective buyers (for their benefit, if nothing else). IC could be of value to slot hungry carriers, or perhaps a Middle East investor? AI, meanwhile, could fuel expansion plans for a local carrier like UK?

Whatever be the case, I sure do hope that the AI brand gets preserved, maybe even reversed to its glory retro days. Also, it'll be sad if a new buyer decides to dismantle the hub AI has worked on creating at DEL.
 
CaliguyNYC
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Re: Air India Privatization, by June-Failed sale. What next?

Sat Jun 16, 2018 4:01 pm

Why should they retain Alliance Air. Just expand the Udan scheme - meaning just subsidize carriers for essential routes like most ever other country does. The GOI needs to get out of aviation.
As far as AI being irrelevant - look they have routes, slots (BOM/LHR/etc), infrastructure, planes, some good staff etc. Thatis their value. The GOI should just accept that value and then adjust it with the debt AI has and then write off the rest (assuming the value is not greater than the debt. It would be a travesty to let all the investment into AI go to total waste. Taxpayers have already spent the money, let an INian carrier get some benefit
 
pg89
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Re: Air India Privatization, by June-Failed sale. What next?

Sat Jun 16, 2018 9:03 pm

CaliguyNYC wrote:
Why should they retain Alliance Air. Just expand the Udan scheme - meaning just subsidize carriers for essential routes like most ever other country does. The GOI needs to get out of aviation.


The trouble is that subsidies are designed only to prevent a loss and not to turn a profit. What's the point of a subsidy when SpiceJet can get away with charging 25k for a one-way Delhi-Dharamshala ticket?

Rather than pay private carriers to serve regional routes, it's better to have CD take care of the handful of remote destinations that need connectivity for humanity's sake. Private carriers will anyway ensure they make money out of smaller airports (look out Jabalpur, Allahabad and Hubli), UDAN or not.
 
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flyingclrs727
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Re: Air India Privatization, by June-Failed sale. What next?

Sat Jun 16, 2018 10:08 pm

At this point wouldn't it be better to let AI declare bankruptcy and sell off its assets?
 
dtw2hyd
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Re: Air India Privatization, by June-Failed sale. What next?

Sat Jun 16, 2018 10:08 pm

pg89 wrote:
IMO, the Government of India should retain only regional operations carried out by Alliance Air as PSO. Everything else can and should be sold off for the sake of Air India itself, if nothing else.

I'm a bit unsure about selling AI off as a single unit as opposed to perhaps splitting it back into AI & IC (essentially separate widebody long haul / narrowbody regional carriers). Judging by SQs recent strategic shift towards an eventual merger with MI, and CX's ongoing re-alignment with KA, I'd like to think that AI & IC are better as a single, seamless giant in the long run, of course provided they are under better management.

At the same time, given the size of the Indian market and the marked service differences within AI & IC post-merger, it might make sense to break them up again and offer them to different sets of prospective buyers (for their benefit, if nothing else). IC could be of value to slot hungry carriers, or perhaps a Middle East investor? AI, meanwhile, could fuel expansion plans for a local carrier like UK?

Whatever be the case, I sure do hope that the AI brand gets preserved, maybe even reversed to its glory retro days. Also, it'll be sad if a new buyer decides to dismantle the hub AI has worked on creating at DEL.


They did exactly what you are suggesting in PIM #1. AI(R), AIESL and AIATSL were never offered.

Contrary to a.net's popular belief, AI(International) will be the worst in terms of debt if AI(domestic) is separated. AI(Dom) lost market share because they didn't buy any planes between 2006 and 2016. Most pundits do shallow napkin analysis based on the lost domestic market share. 2/3rd of the domestic fleet is leased, the crew are trained in-house, no potential buyer would accept debt WB related AV/WC debt to AI(Dom).


Also, a.net debates as if AI is a ZERO revenue airline. With almost same fleet size, AI generating $1.1 Billion more than it did in 2012-13.

Total Revenue
2012-13 160,721 ($2.3 Billion) - 95 planes
2013-14 194,807
2014-15 206,132
2015-16 206,103
2016-17 221,777 - 105 planes
2017-18 $3.4 Billion 120?? planes
 
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 12:02 am

dtw2hyd wrote:
pg89 wrote:
IMO, the Government of India should retain only regional operations carried out by Alliance Air as PSO. Everything else can and should be sold off for the sake of Air India itself, if nothing else.

I'm a bit unsure about selling AI off as a single unit as opposed to perhaps splitting it back into AI & IC (essentially separate widebody long haul / narrowbody regional carriers). Judging by SQs recent strategic shift towards an eventual merger with MI, and CX's ongoing re-alignment with KA, I'd like to think that AI & IC are better as a single, seamless giant in the long run, of course provided they are under better management.

At the same time, given the size of the Indian market and the marked service differences within AI & IC post-merger, it might make sense to break them up again and offer them to different sets of prospective buyers (for their benefit, if nothing else). IC could be of value to slot hungry carriers, or perhaps a Middle East investor? AI, meanwhile, could fuel expansion plans for a local carrier like UK?

Whatever be the case, I sure do hope that the AI brand gets preserved, maybe even reversed to its glory retro days. Also, it'll be sad if a new buyer decides to dismantle the hub AI has worked on creating at DEL.


They did exactly what you are suggesting in PIM #1. AI(R), AIESL and AIATSL were never offered.

Contrary to a.net's popular belief, AI(International) will be the worst in terms of debt if AI(domestic) is separated. AI(Dom) lost market share because they didn't buy any planes between 2006 and 2016. Most pundits do shallow napkin analysis based on the lost domestic market share. 2/3rd of the domestic fleet is leased, the crew are trained in-house, no potential buyer would accept debt WB related AV/WC debt to AI(Dom).


Also, a.net debates as if AI is a ZERO revenue airline. With almost same fleet size, AI generating $1.1 Billion more than it did in 2012-13.

Total Revenue
2012-13 160,721 ($2.3 Billion) - 95 planes
2013-14 194,807
2014-15 206,132
2015-16 206,103
2016-17 221,777 - 105 planes
2017-18 $3.4 Billion 120?? planes

1. AI's revenue is still below expenses despite growth of 26% in aircraft.
2. Revenue conditions are worsening due to competition.
3. Expenses are climbing (oil).
4. Assets are only worth what they sell for at auction. In general, the more assets grouped together, the more of a volume discount buyers expect. AI had the misfortune of buying when assets were more expensive than today and has borrowed more against assets than they should have, so one way or another the GoI is not being made whole. The failed sale proved that.
5. Air travel is fungible and there will be private companies that will fill most of the gap without subsidy. It would be far cheaper to subsidize a hundred regional routes than keep AI.

It isn't an assumption of zero revenue, it is the fact Air India is a net wealth destroyer. Every audit (see my prior links) finds unpaid bills (debt).

They need 500 crore ($73.5Million USD) to burn per month at their current level of incompetence. Or should they get another package of, what was it, 38,000 crore or, at the time, about $7.5 billion USD?

Maybe the best solution is bankruptcy, return the aircraft, and hand over the pensions to a guarantee trust with reduced payout with a larger regional subsidy scheme?

Lightsaber
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vadodara
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 2:31 pm

Someone thinks it is important that AI maintain DEL hub. Great!

Retain that and sell other non-coreroutes/slots starting with BOM.
 
pg89
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 3:43 pm

vadodara wrote:
Someone thinks it is important that AI maintain DEL hub. Great!

Retain that and sell other non-coreroutes/slots starting with BOM.


TBH, being a travelling Delhiite, I've come to appreciate the range of competitively priced international connections AI has opened up. Its put the true value of flying other airlines in sharp perspective, and I've never really had a bad experience with them on long haul.

AI should definitely stop bothering with BOM. It's a 9W fortress anyway, and anything AI does here is too little too late. Better to strengthen DEL.

Sorry if I missed the discussion, but what happens with Air India Express???
 
vadodara
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 7:11 pm

If AI Express can get a buyer, put that on block. Or go for an IPO.
 
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 7:12 pm

vadodara wrote:
If AI Express can get a buyer, put that on block. Or go for an IPO.

If sold separately. If the GoI insists on all or nothing, I believe the sale will again fail and everything goes down together.

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
musman9853
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 9:33 pm

@ lightsaber, how much would air india's planes be expected to sell for at auction? If boeing sells new 789s for like 120 million, will buyers expect a massive discount off that price? or would it be near what it would be worth had AI sold airframes normally
 
Planesmart
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 9:39 pm

lightsaber wrote:
vadodara wrote:
If AI Express can get a buyer, put that on block. Or go for an IPO.

If sold separately. If the GoI insists on all or nothing, I believe the sale will again fail and everything goes down together.

Lightsaber

There are inter-company loans, cross guarantees, loans and liabilities still to be discovered, and financial covenants will be breached, which means unwinding by entity, asset, route or other criteria is not possible.

Businesses often encounter financial problems, and these are generally managed by the banks, working together constructively. The Government usually creates a legal framework to enable open discussions and collaboration, suspending anti-competitive legislation.

The Indian Government has previously looked at NZ's Statutory Management legislation.

The Government and people will be the biggest losers. No-one can put an absolute on the magnitude involved, other than to say, it's getting bigger every day. Whatever action is taken, some will profit, most won't. Understanding, minimising, and equitably sharing the costs are the stumbling blocks. And politics.
 
Antarius
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 9:48 pm

dtw2hyd wrote:
lightsaber wrote:
AISATS should be split off. Most bidders do not want to buy it, so those employees should be part of another sale.

If the new package is a good deal, Air India will sell and there might even be a bidding war. If the sale fails again, I doubt there will be interest at a fair price for the 3rd attempt. So AI must be offered at what is perceived as a minimum price that is a good deal.

That means the amount of debt taken by the buyer and perhaps even assets must be part of the bid.

I'm not sure why you are parsing the numbers so much. If AI has good metrics, they should publish them as Indigo does out in the press.
Hours per aircraft per day.
Cycles per aircraft per day.
Passengers per employee...

Heck, break out Air India Express.

LIghtsaber


There is no need to break-up. All these are already separate legal entities with separate books. GoI could have offered them al-a-carte but choose to bundle.

AI has two GH entities.
AI-SATS 50:50 JV and is probably the most profitable, Even SATS would take rest of the 50%. SATS(Singapore) gets close to 1000 crores in dividends every year.
AIATSL, without it most airlines and airports wouldn't be operational. Swissport/Menzies is not going to operate an airport with just 5 flights a day.

AIESL is Asia's largest MRO. 31 hangars at 6 MRO locations,2 hubs, 65 line stations, 6000 employees. (Emirates Engineering has 8 hangars at 1 MRO location,1 hub, 3000 employees.)

Why AI cannot be revived. Five main reasons, All 5 are GoI related.
1) 15% on $3Billion Indian PSB held debt (Close to $450 Million dent)
2) 40% on ATF (Foreign carriers pay 0% per international standards)
3) 50% on MX/MRO (Indigo, proud Indian carrier gives all its business to Sri Lanka to avoid taxes/duties)
4) Payments to VVIP aircraft. (AI has to pay $2Million per month for two 77Ws, whether it gets paid or not, read 5)
5) Unpaid VVIP charter invoices by GoI


4 and 5 are unfortunate debts at AI has been saddled with unfairly. That said, 24 million per year is not why AI is needing billions in cash infusions.

1,2,3 - other carriers are facing the same situation s regarding taxes, interest and market conditions.
2018 : AUA | CLT | IAH | HOU | DFW | COS | DEN | CLL | ORD | PVG | PEK | PHX | OAK | SFO | SJC | PHL | YYC | STL | DTW | HNL | OGG | JFK | LGA
 
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lightsaber
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 9:49 pm

musman9853 wrote:
@ lightsaber, how much would air india's planes be expected to sell for at auction? If boeing sells new 789s for like 120 million, will buyers expect a massive discount off that price? or would it be near what it would be worth had AI sold airframes normally

The issue is Boeing is no longer selling 789s at 120 million. They have brought down their production costs. In general, about the seller expects to be paid an estimate of the next maintenance costs pro-rated for use. In general, a plane drops in value 5% per year e.g., a 789 now is 100 million new, 95 million at 1 year, 90 million at 2 and so on. There are many here who know used aircraft valuation better than I do. Now, eventually, a 787 which is certified for 60,000 cycles and an amazing 200,000 hours will depreciate slower. To put it into perspective, an A320 is *now* certified for 60,000 cycles and 120,000 hours. So the 787, if somehow flown as intensely as say Easyjet does their A319s will wear out in cycles at about 24 years.

Planesmart wrote:
lightsaber wrote:
vadodara wrote:
If AI Express can get a buyer, put that on block. Or go for an IPO.

If sold separately. If the GoI insists on all or nothing, I believe the sale will again fail and everything goes down together.

Lightsaber

There are inter-company loans, cross guarantees, loans and liabilities still to be discovered, and financial covenants will be breached, which means unwinding by entity, asset, route or other criteria is not possible.

Businesses often encounter financial problems, and these are generally managed by the banks, working together constructively. The Government usually creates a legal framework to enable open discussions and collaboration, suspending anti-competitive legislation.

The Indian Government has previously looked at NZ's Statutory Management legislation.

The Government and people will be the biggest losers. No-one can put an absolute on the magnitude involved, other than to say, it's getting bigger every day. Whatever action is taken, some will profit, most won't. Understanding, minimising, and equitably sharing the costs are the stumbling blocks. And politics.

Oh my.... If it cannot be unwound, I know of no way to save Air India. It is simply too political a beast if a single entity for anyone to reform. :white:

All the debt, including all that unknown magnitude that seems to be found every audit is only growing.

Some should be dividable. For example the Ex-im loans on the 787s. If a more viable entity were to take over... Well, I guess Indian bankruptcy law will get a good test. I hope it is up to it.

Lightsaber
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
vadodara
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Re: Air India Privatization, by June-Failed sale. What next?

Sun Jun 17, 2018 10:59 pm

lightsaber wrote:
vadodara wrote:
If AI Express can get a buyer, put that on block. Or go for an IPO.

If sold separately. If the GoI insists on all or nothing, I believe the sale will again fail and everything goes down together.

Lightsaber


Unions are a big issue; issue is what to do with the excess staff. If AI Express i.e. planes, routes, slots etc are put chic-a-block, likes of Spice, Air Asia, even GoAir will bid.

However if u remove another ‘good’ asset, the rump AI will be even less attractive.
 
dtw2hyd
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Re: Air India Privatization, by June-Failed sale. What next?

Mon Jun 18, 2018 2:03 am

Few myths need to be busted.

Bankruptcy is not an option for sovereign entities, even US chapter 9 is limited to municipalities.

21 of 27 AI 787s are on sale-and-leaseback. If 787 values are tanking, it is a problem for lessors, not AI. First, 12 are significantly overweight anyway.

AI owns/lease finances 2006 delivered 40xA32x and 2006-09 delivered 15x77W/Ls . Assuming 12-year payment plan, these should be paid off very soon. That lease 2018 deliveries of 3x77Ws(2 VVIP).

All new A320SLs and NEOs are on dry lease/PBTH.

----
AI Express is about to start complete cabin refit of 17x737s.
 
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kitplane01
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Re: Air India Privatization, by June-Failed sale. What next?

Mon Jun 18, 2018 2:54 am

dtw2hyd wrote:
Few myths need to be busted.

Bankruptcy is not an option for sovereign entities, even US chapter 9 is limited to municipalities.



I wouldn’t want people to be confused. Bankruptcy is an option for Air India. Indian law allows this.

https://www.google.com/amp/s/m.economic ... 413241.cms

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