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

unrave · Thu May 03, 2018 7:21 pm

AIX constitutes a very small portion of AI. AIX makes a profit of 300 cr against AI annual loss of 6000 cr. Irrelevant to the discussion.

dtw2hyd · Thu May 03, 2018 8:09 pm

Loss is irrelevant if GoI talking over high interest debt.

AI Group will show
$800 Million profit if GoI takes over the debt, even without privatization.
$500 Million profit if working capital debt held by same government owned banks is allowed to restructure at international market rate.

BTW, the other ULCC has $4B av related debt, per 2017-18 annual report. 17,000 employees, $4B debt, will work only as long as gerbil wheel is spinning.

kitplane01 · Fri May 04, 2018 3:47 am

lightsaber wrote:
dtw2hyd wrote:
The process is still politically motivated with enough wiggle room to prove GoI didn't giveaway family silver. Jaitley did his magic by keeping all real estate, AI(R) and AIESL. Combined worth more than debt GoI keeping. GoI always considered Engineering as National Security Interest entity, by keeping a small airline GoI can ramp up later and real estate worth few $Billons once buyer vacates these properties.

Honestly, GoI should have offered
Assets
1) Aviation assets
2) Anyone with pilot/cabin crew license
3) Flight ops/route planning/revenue management personnel
4) Slots

Debt
1) Av related debt
2) Crew training cost

Makes it very simple for interested buyers.

Everything else except AIESL should go to AIATSL the ground handling entity.

Why discussing how AI should be facinating to us enthusiasts, we have a failed auction.

That means during the next auction, only the bidders set the terms.

It amazes me how few here talk return on investment. How few here realize that debt against an asset often exceeds it's value as there is goidwill as a collateral.

Let each bid and take the group of bids that is highest. For example 6E has a far more efficient domestic operation than air India. 6E has no desire to be in ground handling, so let them bid as they wish.

Someone else will bid on ground handling.

For the domestic operations... I'm not so sure. They should keep the Air India brand to ensure a sale.

But any bidder will insist on using their training, route planning, and support groups. While none of us wants people redundant, the reality is that if AI was such a jewel, it wouldn't need privatization.

Let the bidders decide the value. With a fair auction, AI can continue.

But for now, AI, SAA, and AZ are a triplet of government money destruction. How will India stop that?

The goal is not to sell Air India. The goal is to look like the government is "Doing Something" without actually making anyone too mad. The method is to pretend to sell Air India without actually doing so. People keep analyzing the government of India's actions through the wrong prism. Their goal is *not* to sell Air India.

Here is my bet (open to the first person to accept).

I bet Air India will still be owned by the Indian government for the on May 4th, 2019. You bet the opposite. Stakes: The losers posts the words "I was wrong, and kitplane01 was right".

unrave · Fri May 04, 2018 1:47 pm

CAPA reckons AI will lose USD 1.5 to 2 bn in the next two years as things stand. Highly imperative that the govt gets rid of this taxpayer leach at the earliest.

dtw2hyd · Fri May 04, 2018 2:33 pm

Math is not the forte of Indian av pundits, interesting for a country which turned itself into a STEM grad mill.

AI's net loss was INR 3,500 crores (~$530 Million). $530 Million x 2 is not $2B.

AI's loss is revenue for Indian government owned banks. Also tax payers are not writing a check for AI's loss.

P1aneMad · Fri May 04, 2018 3:49 pm

So who exactly is underwriting these massive loses year after year?
Aliens?
Foreign banks?
Foreign governments?
Private individuals, Indians or otherwise? it would be interesting to know.

Also, the $530 million lose was for 2017, right?
Over 2018 and 2019 with the price of oil being and expected to continue to be much, much higher than what it averaged during 2017 I would guess that CAPA's estimate of loses in the tune of "USD 1.5 to 2 bn in the next two years as things stand" is spot on.

lightsaber · Fri May 04, 2018 3:54 pm

unrave wrote:
CAPA reckons AI will lose USD 1.5 to 2 bn in the next two years as things stand. Highly imperative that the govt gets rid of this taxpayer leach at the earliest.

Oh... Please share the link.

AI is much worse than public numbers. Too much of true opperating expenses is booked as overhead. The truth is booked in bids. If it was worth buying AI, someone would.

So how to wind them down?

Lightsaber

dtw2hyd · Fri May 04, 2018 5:08 pm

To cover losses, AI borrows more money at high interest from Indian government banks. More debt, more interest payments. The hole gets deeper.

If it had owner or sister concerns offering 0% finance, sweet heart deals and contract novations, it also can show profit year after year.

P1aneMad · Fri May 04, 2018 5:48 pm

So AI keeps getting bailed out by STATE owned banks. Banks who are owned by the tax payers!
And who will pay these loans if AI is unable to do so?
Aliens?
Foreign banks?
Foreign governments?
Private individuals from abroad?

No, Indian tax payers will!
And BTW why private financial institutions, Indian or International do not lend AI with slightly lower interest rates than what government owned banks do? If they think it is bad investment such a loan why on earth would state owned banks keep digging themselves into an ever deepening hole?

Economics 101 free lesson: Normal companies, airlines or otherwise are not profitable because they have access to cheap interest rates. They have access to cheap interest rates BECAUSE they operate profitably!

dtw2hyd · Fri May 04, 2018 6:04 pm

Indian banks have $250 Billion bad debts. But they are making $600 Million/year on $5B AI loans.

Global rate for working capital loans is 3%-5%. Indian PSU Banks charge 15% Indian banks are gouging because global banks are not allowed to lend WC to Indian carriers.

You cannot have a thriving open aviation sector, when your banking sector is ailing and protected.

lightsaber · Fri May 04, 2018 7:05 pm

dtw2hyd wrote:
Indian banks have $250 Billion bad debts. But they are making $600 Million/year on $5B AI loans.

Global rate for working capital loans is 3%-5%. Indian PSU Banks charge 15% Indian banks are gouging because global banks are not allowed to lend WC to Indian carriers.

You cannot have a thriving open aviation sector, when your banking sector is ailing and protected.

All growth is impeeded by a poor financial sector.

But AI has been such a basket case for so long, who cares? It is obvious the current structure is broken.

What is important is:
1. Losses are so big the banking and opperating profit do not add up. There is a huge money leak somewhere that hasn't been explained.
2. There are no buyers. It doesn't matter what us enthusiasts think. Buyers are smart. If they could make money they would bid.

Since no buyers, what is the best way to wind down AI?

Lightsaber

unrave · Fri May 04, 2018 7:34 pm

dtw2hyd wrote:
Math is not the forte of Indian av pundits, interesting for a country which turned itself into a STEM grad mill.

AI's net loss was INR 3,500 crores (~$530 Million). $530 Million x 2 is not $2B.

AI's loss is revenue for Indian government owned banks. Also tax payers are not writing a check for AI's loss.

CAPA predicts AI will lose $2 bn in the next two years

Next two years mean the future.

2017 - Past
2019, 2020 - Future

dtw2hyd · Fri May 04, 2018 7:56 pm

lightsaber wrote:
dtw2hyd wrote:
Indian banks have $250 Billion bad debts. But they are making $600 Million/year on $5B AI loans.

Global rate for working capital loans is 3%-5%. Indian PSU Banks charge 15% Indian banks are gouging because global banks are not allowed to lend WC to Indian carriers.

You cannot have a thriving open aviation sector, when your banking sector is ailing and protected.

All growth is impeeded by a poor financial sector.

But AI has been such a basket case for so long, who cares? It is obvious the current structure is broken.

What is important is:
1. Losses are so big the banking and opperating profit do not add up. There is a huge money leak somewhere that hasn't been explained.
2. There are no buyers. It doesn't matter what us enthusiasts think. Buyers are smart. If they could make money they would bid.

Since no buyers, what is the best way to wind down AI?

Lightsaber

AI privatization is a done deal. Once Modi sets his eyes on something it is toast. Whether it is an airline or a province or a person. End of story. I gave perfect analogy in the past which got deleted.

That leaves the future of Indian aviation without AI. Without addressing the rot in the finance sector, no Indian carrier can thrive. Only way private carriers are surviving is thru financial engineering. 6E cannot profit on SLB forever. Others cannot bring in money through some safe haven forever.

A 4% margin industry cannot borrow at 15% and make profit.

dtw2hyd · Fri May 04, 2018 9:50 pm

unrave wrote:
CAPA predicts AI will lose $2 bn in the next two years

Next two years mean the future.

2017 - Past
2019, 2020 - Future

Link??

lightsaber · Sat May 05, 2018 12:41 am

CAPA fears Air India will be shut down if not divested:
http://www.newindianexpress.com/busines ... 810355.amp

Apparently a Twitter storm of concern. Link includes 1.5 to 2 billion USD loss over next two years. Apparently more Twitter recommending changes to offer terms as bidders insist on changes to operations and labor.

All we need to know that with no bids the current terms have to be thrown out. A true auction should occur with a known minimum bid or AI is shut down.

Obviously AI privatization is not a done deal. We seriously need to discuss how to wind down the company. I believe this conclusion is beyond obvious if CAPA is on Twitter expressing the concern. They tend to not be negative...

Lightsaber

unrave · Sat May 05, 2018 4:09 am

dtw2hyd wrote:
unrave wrote:
CAPA predicts AI will lose $2 bn in the next two years

Next two years mean the future.

2017 - Past
2019, 2020 - Future

Link??

Capa India has tweeted this. Also sent out a note to subscribers. Don't know if a public link is available.

dtw2hyd · Sat May 05, 2018 2:46 pm

So, NP Kaul pulled out the $2B number from somewhere.

The year when AI lost $1B

It has 27,000 employees
OIl was at $100+/BBL (May be even $120)
Its 77Ls were grounded or minimum use.
It was taking deliveries of roughly one WB/month.
Its ~ 30-year-old A320s were giving problems.
Spare parts were on cash payment only.

Now it has 17,000 (4000 are core staff, rest ground handling)
Oil is at $80
No grounded WBs
No pending WB orders
Replaced all A320 double bogies with NEOs and continue to replace
Soon 744s will be returned (may even make a profit on SLB)
Spare parts are on an advance exchange program.

By 2020, AI will have 2,000 fewer employees,
Its 777s will be paid off.
A320 will be owned or Dry Lease/PBTH NEOs.
Even if oil prices increases, Fuel efficient 787s, and NEOs will help.

AI is far leaner and efficient than it has been in 2012. I don't see any condition under its loss will be doubled in 2018-19 or 2019-20, unless Indian banks charge 30% interest.

In comparison -
2015-16 6E had 12,500 total employees
2016-17 - 17,000 employees. Even if it added 50 NBs, shouldn't need 4,500 more employees.
6E doesn't provide ground handling (or) engineering services.
NEOs pending SLB will burn cash reserves (or) add aircraft debt.
Lack of SLB profit will result in the working capital shortage, need to borrow WC

DTWLAX · Sat May 05, 2018 3:32 pm

dtw2hyd wrote:

Link??

http://www.dnaindia.com/business/report ... hy-2611834

lightsaber · Sat May 05, 2018 4:24 pm

RASK is dropping in India. CASK, due to fuel, is going up.
IndiGo’s Chief Financial Officer Rohit Philip said during a conference call to discuss the financial results that the lower quarterly profit was mainly due to a rise in fuel costs, foreign exchange loss and lower yield. On the incoming A321neos, Mr. Philip said, “These will have 15% less seat mile cost, which will help.”

Indigo's profit just dove 73% on expenses:
http://www.thehindu.com/business/indigo ... 752808.ece

dtw2hyd wrote:
AI is far leaner and efficient than it has been in 2012. I don't see any condition under its loss will be doubled in 2018-19 or 2019-20, unless Indian banks charge 30% interest.

Does Air India have some secret to halt declining market yield and rising fuel costs when their #1 competitor is finally receiving aircraft with far lower CASK. Is Air India ready for the next stage of competition? So far they have not been equal to the task.

So the losses are believable. Please provide a link to AI's quarterly results. Until they post those, we know they aren't being run as a business. How are they doing in the low RASK higher CASK environment?

We need to talk about what to do post (failed) sale including an orderly (slow) shutdown.
Please see my above link, Air India is in a bad situation. The reform was too slow and too late.

Don't celebrate the competition having issues, if Indigo's CASK went up 7.3%, what did it do at AI?
http://www.thehindu.com/business/indigo ... 752808.ece

Prove me wrong, have AI sell soon. If not, how to end the cash bleed. How to perform an orderly shutdown.

Lightsaber

dtw2hyd · Sat May 05, 2018 8:00 pm

6E CASK excluding fuel went up by 5.3%, with fuel up by 7.4%.

SamYeager2016 · Sat May 05, 2018 9:29 pm

dtw2hyd wrote:
6E CASK excluding fuel went up by 5.3%, with fuel up by 7.4%.

Since AI is super efficient I'm sure they'll turn in lower CASK figures than inefficient 6E. :rotfl:

dtw2hyd · Sat May 05, 2018 10:00 pm

SamYeager2016 wrote:
dtw2hyd wrote:
6E CASK excluding fuel went up by 5.3%, with fuel up by 7.4%.

Since AI is super efficient I'm sure they'll turn in lower CASK figures than inefficient 6E.

One cannot except healthy aviation sector without fixing structural issues like lack of reasonable working capital loans, heavy taxes on fuel and maintenance. These issues are not specific to AI.

Modi will sell AI without any debt for a $1. Everyone's wish is fulfilled, then what?

The structural issues are contagious, took down KF, almost took down SG, stunt growth of UK and I5.

What makes experts think 6E is immune? or AI under a new owner.

lightsaber · Sat May 05, 2018 11:32 pm

Wow, AI"s debt is 8,816 crore to be transferred.
https://www.msn.com/en-ae/news/other/ai ... ar-AAwNaHB

I bet even more will be dug up. How much in losses were really hidden.

No wonder CAPA recommended winding down. For with an estimated 10,000 to 13,380 more n losses before a bidder could hope to turn AI around.

In an industry that makes 4% to 11% is there a business case to keep Air India flying?

Lightsaber

dtw2hyd · Sat May 05, 2018 11:47 pm

lightsaber wrote:
Wow, AI"s debt is 8,816 crore to be transferred.
https://www.msn.com/en-ae/news/other/ai ... ar-AAwNaHB

I bet even more will be dug up. How much in losses were really hidden.

No wonder CAPA recommended winding down. For with an estimated 10,000 to 13,380 more n losses before a bidder could hope to turn AI around.

In an industry that makes 4% to 11% is there a business case to keep Air India flying?

Lightsaber

There is $3.2B revenue, every airline including your well-run numbers creative accounting airline pays current liabilities from annual revenue.

Why only OMG tantrum for AI. Kapil Kaul of CAPA India is not an expert in anything. CAPA is another marketing/brand image management company, parroting views of its clients.

Chinese government buys planes and subsidizes $1B/year with pride. Indians bailout AI on average $200M/year with a lot of guilt.

lightsaber · Sun May 06, 2018 5:20 am

dtw2hyd wrote:
lightsaber wrote:
Wow, AI"s debt is 8,816 crore to be transferred.
https://www.msn.com/en-ae/news/other/ai ... ar-AAwNaHB

I bet even more will be dug up. How much in losses were really hidden.

No wonder CAPA recommended winding down. For with an estimated 10,000 to 13,380 more n losses before a bidder could hope to turn AI around.

In an industry that makes 4% to 11% is there a business case to keep Air India flying?

Lightsaber

There is $3.2B revenue, every airline including your well-run numbers creative accounting airline pays current liabilities from annual revenue.

Why only OMG tantrum for AI. Kapil Kaul of CAPA India is not an expert in anything. CAPA is another marketing/brand image management company, parroting views of its clients.

Chinese government buys planes and subsidizes $1B/year with pride. Indians bailout AI on average $200M/year with a lot of guilt.

When you try to privatize a company and find much more debt than expected, there is a work for that: fraud.
For the first time Air India is being truly audited and the process is bringing to the surface many hidden skeletons.

Yes, airlines pay debt from revenue. But that requires CASK to be below RASK. As I posted much earlier in this thread CASK is above RASK. That is a fundamentally broken business.
The operating profit has proven to not include expenses that were hidden.

Why cannot Air India make money when other Indian airlines do so without piles of money meant for other GoI expenses must subsidize it?

Look at how much the debt has grown in the short time this discussion has gone on.

Have we passed the hidden debt of Enron yet? I believe we are getting close...

Seriously, this has a chance of being the greatest fraud ever. So let's stop pretending this is unfair to the company.
Let us solve the problem that the company was loosing so much money they hid a huge amount of debt.

I would like to see *some* of the jobs saved. I would like to prevent a disruption to the economy of India a poor shutdown would temporarily create.
The best thing would have been to sell Indigo the international operations split off of the more bloated portions.

Please show a reasonable breakdown like the numbers run airline you dismissed that I can find:
What fraction of Air India's revenue goes to salaries (contractors included)?
Fuel?
Aircraft?
Purchased services?

Every time I find a complete and comprehensive list, the lost for Air India to fly is much higher than Indigo and higher than their revenue. That cannot continue. 6E has more revenue than costs. EK has more revenue than costs.

It all comes down to CASK is 4.7 and RASK is 4.0.

Indigo just reported RASK is dropping.
What do you think AI's RASK was last quarter? CASK? The other Indian airlines shall report those figures in due time. When do we get to know AI's?

My prediction? RASK probably fell in line with 6Es drop, CASK? Probably increased about as much as 6E, maybe less due to cost cutting.

But seriously, we're ignoring the cost cutting efforts at Indigo (A321s will cut CASK 15%), Spicejet (MAX, paying off 2,000 crore of debt).

Spicejet
RASK: 3.76
CASK: 3.67
http://corporate.spicejet.com/Content/p ... Q4FY17.pdf

Indigo:
RASK: 3.64
CASK 3.15 (up from 3.01 presented in October)

https://www.goindigo.in/content/dam/goi ... 20FY18.pdf

Efficiency is relative. Air India has proven it cannot adapt as fast as the competition.
Or what new effort will make it much more competitive?

Air India has 16 times the debt of Indigo. There is no way to explain that:

https://www.firstpost.com/business/air- ... 20047.html

I do see the employee count per aircraft has been impressively improved at AI. So why the almost third higher CASK?
Then I saw, AI is paying for about 4,000 ticketing and sales people Indigo doesn't pay for...
They aren't doing their job, 6E's load 84% to about 76%.

When I go through, AI has done well on some metrics, but since losses keep being found that exceed expectations.

Either sell the airline or do a controlled shutdown.
If you know a better way to sell the airline, suggest. I can never figure out why AI's individual numbers never add up...

lightsaber wrote:
unrave wrote:
lightsaber wrote:
Wow...

Market value of Air India: 28,500 crore

Debt twice that. Oh... This won't end well.

The invitation for EoI has detailed financials: http://www.civilaviation.gov.in/sites/d ... RANDUM.pdf

Interesting link
CASK: 4.7
RASK: 4.0
3.13.5 shows liabilities growing.

No indemnification of future found liabilities.
Total profit:. -26%

Selling 76% of Air India

Errr... Perhaps not a bad thing Indigo has too low a net worth to bid.

Lightsaber

kitplane01 · Sun May 06, 2018 5:28 am

dtw2hyd wrote:

AI privatization is a done deal. Once Modi sets his eyes on something it is toast.

It's not a done deal at all. A done deal would involve a contract with a willing buyer. No one is even willing to put in a bid.

Name a date!

By WHEN do you think the AI privatization will be done? An actual date! Because I'd bet that whatever date you name, AI will not be privatized by then.

dtw2hyd · Sun May 06, 2018 12:23 pm

lightsaber wrote:
...
When you try to privatize a company and find much more debt than expected, there is a work for that: fraud.
...
Have we passed the hidden debt of Enron yet? I believe we are getting close...
...
I do see the employee count per aircraft has been impressively improved at AI. So why the almost third higher CASK?
Then I saw, AI is paying for about 4,000 ticketing and sales people Indigo doesn't pay for...
...
Lightsaber

And why would any buyer buy without due diligence? If they do it is on the buyer. Allegedly, when Daimler bought Chrysler, Chrysler told they had $2B cash reserves, Daimler later realized they had $10B debt.

Enron was a bogus exchange of commodities.

AI earns $3.2 Billion including foreign exchange. 6E doesn't earn much foreign exchange, 6E's exposure to forex fluctuation is higher than AI's.

About 6E's claim of total "69" sales/ticketing employees. 6E operates at 50 airports. Do your math, it is not a valid number.

6E is not the only one having efficient A320 NEOs.
AI has 28xA320NEOs on Dry Lease/PBTH. 6E not able to SLB. Smart move by AI
AI was able to SLB 21x788s including early built lemons Smart move to get rid of lemons by 2024-26.
AI will outright own all its 777s in two years, No more finance payments. Smart move
GE90s are on 20-year GE OnPoint at its own facility.

BTW, AI has higher revenue per employee than 6E. How does it matter if it has more employees?

6E added 4,500 employees last year, AI's natural attrition is about 1000/year.

If you compare the trend of AI and 6E, AI getting leaner and 6E is getting bloated.

sibibom · Sun May 06, 2018 2:45 pm

People are making too much of Indigo's workforce. They are adding a new type in their fleet (ATR). They probably were expecting to have 20 more NEOs than they are currently flying, and they are adding new stations. It will be bloated for next couple of years(especially if they add a widebody by next year), but they are planning for a fleet for 250-270 aircraft. And it ain't easy to find the right kind of labour in India in short notice.

Air India meanwhile has no new aircraft for growth other than NEO for replacements and maybe minimal growth

Kashmon · Sun May 06, 2018 4:52 pm

It is hilarious that half this thread is people trying to claim AI is a more sound operation than 6E....

dtw2hyd · Sun May 06, 2018 6:11 pm

sibibom wrote:
People are making too much of Indigo's workforce. They are adding a new type in their fleet (ATR). They probably were expecting to have 20 more NEOs than they are currently flying, and they are adding new stations. It will be bloated for next couple of years(especially if they add a widebody by next year), but they are planning for a fleet for 250-270 aircraft. And it ain't easy to find the right kind of labour in India in short notice.

Air India meanwhile has no new aircraft for growth other than NEO for replacements and maybe minimal growth

6x ATRs and 40 NEOs shouldn't need 4,500 more ground handling employees. Now average is about 106/plane.

AI added 18x777s, 27x787s, and 10xATR72s(+10 on order) and replaced 23xA320s(+10 on order) while cutting 10,000 employees.

Ultra/Long/Medium haul trips need lot more crew than domestic milk runs.

At this rate, how many more employees 6E need if they start long-haul?

The goal should be to keep it lean, not gouging on pizza and all along calling others obese.
EK keep claiming they are lean, now 100,000 employees for 250 planes for one hub operation.

unrave · Sun May 06, 2018 6:24 pm

Management 101: Your business is unviable if your cost > revenue. All this talk of AI becoming lean and mean and world class amounts to nought if it can't satisfy this basic business principle.

SamYeager2016 · Sun May 06, 2018 6:44 pm

dtw2hyd wrote:

AI added 18x777s, 27x787s, and 10xATR72s(+10 on order) and replaced 23xA320s(+10 on order) while cutting 10,000 employees.

It's great that AI "cut" 10,000 employees but why were they employed in the first place? It can hardly be called a slight overstaffing! IMHO all your numerous posts that seek to claim that AI is seriously efficient and beats other airlines hands down strike me as a case of "protesting too much".

lightsaber · Sun May 06, 2018 6:57 pm

I cannot take discussion seriously that ignores the fundamental business principals. If 4,500 staff somehow another 34 personnel per aircraft can be hand waved away? That is a crippling handicap.

Is AI paying off aircraft at a rate pertinent to resale value?

The two compared airlines can profitably return aircraft early as a risk reduction.

And their revenue meets business 101:

unrave wrote:
Management 101: Your business is unviable if your cost > revenue. All this talk of AI becoming lean and mean and world class amounts to nought if it can't satisfy this basic business principle.

Management 105, do that before the business develops such a rotten culture it is even more expensive to save.

How in the heck was an airline opperating with twice the needed employees? How can they be taken seriously when they post one employee count per aircraft and then in the due diligence process another 4,500 are found!

Oops... We just forgot?

Lightsaber

dtw2hyd · Sun May 06, 2018 7:32 pm

SamYeager2016 wrote:
dtw2hyd wrote:

AI added 18x777s, 27x787s, and 10xATR72s(+10 on order) and replaced 23xA320s(+10 on order) while cutting 10,000 employees.

It's great that AI "cut" 10,000 employees but why were they employed in the first place? It can hardly be called a slight overstaffing! IMHO all your numerous posts that seek to claim that AI is seriously efficient and beats other airlines hands down strike me as a case of "protesting too much".

It was a state-owned employment creation program. Why did 6E hire 4500(FY17-17000, FY16-12,500) last year, do they need 100 new employees with every new aircraft. How many new stations did they add?

If AI hired too many by mistake, 6E shouldn't do the same and blame raise in CASK on oil prices.

There is a news report by the Firstpost, comparing AI,9W and 6E through 15 charts, go through all charts/comments and conclusion.

https://www.firstpost.com/business/air- ... 20047.html

I am not saying AI is efficient than 6E, the path 6E is on doesn't look promising, it has to tread carefully until PW issues are fixed.

6E business model works only if it can SLB new frames for a profit. Its MX model is not suitable to operate old planes, 6E cannot get FHS-TSP on a 13-year-old King Fisher plane without paying arm and a leg. No one even on the wet lease can provide 6E level support/service.

lightsaber · Sun May 06, 2018 9:24 pm

dtw2hyd wrote:
SamYeager2016 wrote:
dtw2hyd wrote:

AI added 18x777s, 27x787s, and 10xATR72s(+10 on order) and replaced 23xA320s(+10 on order) while cutting 10,000 employees.

It's great that AI "cut" 10,000 employees but why were they employed in the first place? It can hardly be called a slight overstaffing! IMHO all your numerous posts that seek to claim that AI is seriously efficient and beats other airlines hands down strike me as a case of "protesting too much".

It was a state-owned employment creation program. Why did 6E hire 4500(FY17-17000, FY16-12,500) last year, do they need 100 new employees with every new aircraft. How many new stations did they add?

If AI hired too many by mistake, 6E shouldn't do the same and blame raise in CASK on oil prices.

There is a news report by the Firstpost, comparing AI,9W and 6E through 15 charts, go through all charts/comments and conclusion.

https://www.firstpost.com/business/air- ... 20047.html

I am not saying AI is efficient than 6E, the path 6E is on doesn't look promising, it has to tread carefully until PW issues are fixed.

6E business model works only if it can SLB new frames for a profit. Its MX model is not suitable to operate old planes, 6E cannot get FHS-TSP on a 13-year-old King Fisher plane without paying arm and a leg. No one even on the wet lease can provide 6E level support/service.

Please read your own link. What you suggest cannot matter with as little debt as 6E has. The Pratt engines are flying again. Deliveries will accelerate.

Look at how little debt 6E has. Now that leasing is under worse terms, 6E is buying more.

I hear nothing of how AI is getting ready to compete with a 6E with even lower CASK.

We need to stop diverting from the serious discussion. Not that AI has been found to be in much worse condition than thought (please reread early posts on expected debt and financial viability).

For example, AI didn't acheive financial performance you posted up thread last quarter. 6E made less money and slowed growth. Ok... Pratt will pay compensation and that bad period is over.

Can AI reform enough or should it be wound down?

SpiceJet and GoAir are also on good paths. SpiceJet wisely held off MAX deliveries until they were reformed and the plane debugged.
AI isn't ready for the coming competition.

I would have thought the 50,000 dumped into Air India would have been better used for schools.

Lightsaber

dtw2hyd · Sun May 06, 2018 10:35 pm

lightsaber wrote:
.
I hear nothing of how AI is getting ready to compete with a 6E with even lower CASK.

Lightsaber

Why should an FSC match a ULCC's CASK? Is 6E serving hot meals?

lightsaber wrote:
.
I would have thought the 50,000 dumped into Air India would have been better used for schools.

Lightsaber

Total debt is not a bailout, the cumulate bailout is ~25,000 cr over 10 years. India has no plans to spend on schools, irrigation water or sanitation. $17-$34 Billion for 300-mile railroad, $5B/year to Indian Railway subsidies, $3B on statutes.

What is the logic behind CAPA's recommendation to shut down AI immediately? What is the rush? Looks like CAPA has a client with too much surplus capacity.

pushpakvimaan · Mon May 07, 2018 4:47 am

Do you think Air India can start Africa flights with A320ceo that are being delivered or they shall continue to use them to improve domestic connections

behramjee · Mon May 07, 2018 6:16 am

pushpakvimaan wrote:
Do you think Air India can start Africa flights with A320ceo that are being delivered or they shall continue to use them to improve domestic connections

A320CEO can operate BOM-ADD-BOM (5 hours 20 minutes) but nothing else.

BOM-NBO-BOM it wont be able to operate with a full payload both ways year round. Over here, I reckon it would need a 12 seats payload limitation at least with baggage allowance being 30kg.

From DEL to both ADD/BOM, the A320CEO cannot operate.

pushpakvimaan · Mon May 07, 2018 7:32 am

Should Air India not try one-stop connection via Dubai to connect to Africa ?

globetrotter94 · Mon May 07, 2018 8:01 am

SamYeager2016 wrote:
dtw2hyd wrote:

AI added 18x777s, 27x787s, and 10xATR72s(+10 on order) and replaced 23xA320s(+10 on order) while cutting 10,000 employees.

It's great that AI "cut" 10,000 employees but why were they employed in the first place? It can hardly be called a slight overstaffing! IMHO all your numerous posts that seek to claim that AI is seriously efficient and beats other airlines hands down strike me as a case of "protesting too much".

Why they were employed previously is neither here nor there. I have not seen dtw2hyd denying that AI has been mismanaged (sometimes to the point of criminally so in the past). If an airline is forced to take on widebody orders in excess of what they actually themselves require, and then try to make a haphazard expansion strategy to fit around this order, then I am not at all surprised that they will end up overstaffed when that strategy fails (as happened with AI in the late 2000s).

However, such malpractices have clearly diminished over the past few years. The current crew is younger, more professional, more eager. So no point in harping about such a specific old problem that has largely been sorted out already.

globetrotter94 · Mon May 07, 2018 8:05 am

pushpakvimaan wrote:
Should Air India not try one-stop connection via Dubai to connect to Africa ?

No need to connect via DXB. Air India has already expressed interest to restart at least Nairobi direct from India. They might even have started this route as well as other intended destinations such as LAX, DFW (or IAH--I don't remember which it was), etc. if the current privatization madness had not thrown a spanner in works. Airline also badly needs the 787-9 but can't get those either for the same reason.

zionite · Mon May 07, 2018 9:49 am

pushpakvimaan wrote:
Should Air India not try one-stop connection via Dubai to connect to Africa ?

1. Why would AI do that instead of going directly from BOM?
2. Why would Dubai allow a 5th freedom flight?
3. Why would Emirates or flydubai not object to it?
4. Why would passengers take AI flight from India to Africa with a stop in Dubai when they can get the same from Emirates or flydubai with better comfort and price?

CaliguyNYC · Mon May 07, 2018 1:19 pm

behramjee wrote:
pushpakvimaan wrote:
Do you think Air India can start Africa flights with A320ceo that are being delivered or they shall continue to use them to improve domestic connections

A320CEO can operate BOM-ADD-BOM (5 hours 20 minutes) but nothing else.

BOM-NBO-BOM it wont be able to operate with a full payload both ways year round. Over here, I reckon it would need a 12 seats payload limitation at least with baggage allowance being 30kg.

From DEL to both ADD/BOM, the A320CEO cannot operate.

So the 737 Max can make BOM-NGO. Could the A320NEO make it? How about their A321? I am surprised Kenyan flies, it seems, twice daily with a 737 on BOM-NBO. Seems like a very long flight for a narrow body. But I guess a nonstop is just that, nonstop.

hohd · Mon May 07, 2018 1:50 pm

On this AI vs 6E, AI operates world wide which involves more risk, but more reward and has to compete with all kinds of airlines (some subsidized by their governments) or some like EK, QR which are semi-private, but have a sweetheart deals on airport usage. 6E is a good airline for domestic market, but they have not been able to translate this internationally 6E could have gone after Malaysia market, where Indian carriers have ZERO presence. While AI is nowhere sound due to its heavy debt load, it is not as bad as CAPA portrays.

lightsaber · Mon May 07, 2018 2:55 pm

hohd wrote:
On this AI vs 6E, AI operates world wide which involves more risk, but more reward and has to compete with all kinds of airlines (some subsidized by their governments) or some like EK, QR which are semi-private, but have a sweetheart deals on airport usage. 6E is a good airline for domestic market, but they have not been able to translate this internationally 6E could have gone after Malaysia market, where Indian carriers have ZERO presence. While AI is nowhere sound due to its heavy debt load, it is not as bad as CAPA portrays.

More reward= 10.5% higher RASK thank Indigo.
More RISK=44.6 higher CASK than Indigo.

I expect Indigo will go more international with the NEO once they are confident of the Pratt reliability. For the plane adds a few hundred nautical miles of range despite the 186 seats.

Indigo is shopping for widebodies. I fully expect growth in their model.

Lightsaber

vadodara · Mon May 07, 2018 3:33 pm

I have not seen dtw2hyd denying that AI has been mismanaged (sometimes to the point of criminally so in the past). If an airline is forced to take on widebody orders in excess of what they actually themselves require, and then try to make a haphazard expansion strategy to fit around this order, then I am not at all surprised that they will end up overstaffed when that strategy fails (as happened with AI in the late 2000s).

Yes but what about the 'freebies' the current & former Air India employees, their families, their cousins, their in-laws and so forth get? Shouldnt there be a limit to the extent of non-revenue traffic the airline should give out, especially one that is living on hand-out's?

The current crew is younger, more professional, more eager. So no point in harping about such a specific old problem that has largely been sorted out already.

Quiet possibly but unless the liabilities are clearly identified, defined and accounted for, none of this matters in anycase.

dtw2hyd · Mon May 07, 2018 4:18 pm

About comparing CASK of AI(FSC) with 6E(ULCC).

Are there any cases in the industry?
Emirates vs Fly Dubai
Singapore vs Scoot/Tiger
Malaysian vs Air Asia

Even FSCs with LCC level economy cabin service like
British Airways vs easyjet
US3 vs WN/B6/F9

There is no credibility in this argument.

globetrotter94 · Tue May 08, 2018 6:48 am

CaliguyNYC wrote:
behramjee wrote:
pushpakvimaan wrote:
Do you think Air India can start Africa flights with A320ceo that are being delivered or they shall continue to use them to improve domestic connections

A320CEO can operate BOM-ADD-BOM (5 hours 20 minutes) but nothing else.

BOM-NBO-BOM it wont be able to operate with a full payload both ways year round. Over here, I reckon it would need a 12 seats payload limitation at least with baggage allowance being 30kg.

From DEL to both ADD/BOM, the A320CEO cannot operate.

So the 737 Max can make BOM-NGO. Could the A320NEO make it? How about their A321? I am surprised Kenyan flies, it seems, twice daily with a 737 on BOM-NBO. Seems like a very long flight for a narrow body. But I guess a nonstop is just that, nonstop.

In popular perception, India-East Africa is imagined to be much further than it actually is. Even EgyptAir operates 737s on CAI-BOM-CAI from time to time. I have also seen Ethiopian 737s all the way up at DEL.

globetrotter94 · Tue May 08, 2018 6:52 am

vadodara wrote:
I have not seen dtw2hyd denying that AI has been mismanaged (sometimes to the point of criminally so in the past). If an airline is forced to take on widebody orders in excess of what they actually themselves require, and then try to make a haphazard expansion strategy to fit around this order, then I am not at all surprised that they will end up overstaffed when that strategy fails (as happened with AI in the late 2000s).

Yes but what about the 'freebies' the current & former Air India employees, their families, their cousins, their in-laws and so forth get? Shouldnt there be a limit to the extent of non-revenue traffic the airline should give out, especially one that is living on hand-out's?

The current crew is younger, more professional, more eager. So no point in harping about such a specific old problem that has largely been sorted out already.

Quiet possibly but unless the liabilities are clearly identified, defined and accounted for, none of this matters in anycase.

There has definitely been a crackdown on freebies over the past few years, including several stories that made it into the media. Of course there should be limits, and I think that things are headed in the right direction in that respect.

The improvement in crew certainly does matter from a passenger standpoint. Of course, accounting has always been a problem with AI with so many different parties with their snouts in the trough, but accounting of expenses with regard to crew and staff seems to me to be trivial compared to accounting of bigger items, such as how to liquidate AI's considerable non-aviation assets (lands, buildings, etc.).

vadodara · Tue May 08, 2018 1:07 pm

Obviously, I am not in the know. However, it appears, that there is too much 'fuzzy' accounting that would be buyers feel the bidding for AI for its available slots may not be worth the trouble.

The employees, unless a flying knight show's up, might be the ultimate loosers.

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