IndiGo interested in buying out Air India's flight operations

Low-cost carrier IndiGo has written to the ministry of civil aviation expressing an interest in buying out Air India's flight operations.
IndiGo President Aditya Ghosh wrote a letter to Civil Aviation Minister Ashok Gajapathi Raju soon after a Cabinet decision yesterday giving an in-principle approval for the consideration of Air India's disinvestment.
"IndiGo has written a letter with an unsolicited expression of interest (EOI) in the divestment procedure of Air India," Civil Aviation Secretary R N Choubey said today.
IndiGo said in the letter it would be interested in buying out the international operations of Air India and its low-cost wing, Air India Express.

If that was not possible, it would like to buyout the entire Air India flight operations, including domestic flights, Ghosh said in the letter.
"Many other private players, both domestic and international, have approached us. The first formal expression of interest is from IndiGo," Minister of State for Civil Aviation Jayant Sinha told the media here.

IndiGo is currently the market leader in terms of its share in the domestic aviation market. In May, it recorded a 41.2 per cent market share, followed by Jet Airways at 15.2 per cent and Air India with 13 per cent.
The Cabinet has decided to form an Air India-specific Alternative Mechanism headed by the finance minister and including the civil aviation minister and others.

It will look into five terms of references which include the treatment of unsustainable debts of Air India, hiving off certain assets to a shell company and de-merger and strategic disinvestment of three profit-making subsidiaries.
It will also decide on the quantum of disinvestment in Air India and the universe of bidders.
The first step will now involve constituting the Alternative Mechanism comprising various ministers. After that, the Department of Investment and Public Asset Management (DIPAM) will float an agenda note to the group of ministers with the terms of references, Choubey told reporters.
"We want a great global airline and need to resolve these five issues," said Sinha.

Top officials said the government's decision to look at ways to privatise the airline was in line with its efforts in the past two years for a turnaround of Air India, which has a debt of Rs 52,000 crore and is surviving on a bailout package of Rs 30,000 crore approved in 2012.
"The present management has been able to bring about a turnaround in the airline. From Rs 105 crore operating profit in 2016, Air India is now at an unaudited operational profit of Rs 220 crore," Choubey said.
He said its losses were down from Rs 3,900 crore to Rs 3,300 crore.

"Now there is an airline worth looking at and it is a cash positive airline operationally. Once we handle the issue of debt it is a valuable airline," Choubey said.
If IndiGo has approached the government "post-haste", it means the market sees it as an asset of tremendous value, Choubey added.
As the group of ministers prepares Air India's future plans they will invite inputs from various stakeholders, including former civil aviation ministers.
On whether air travellers should book their flights for holidays planned next year, minister Sinha said, "All commitments and contracts will be fully honoured, including those made to passengers, employees and financial institutions".

Indigo has the largest fleet size among all carriers with 135 aircraft and could expand by another 46 planes in the current financial year.
In May, the airline placed an initial order of 50 turboprops with an aim at participating in the government's regional connectivity scheme.
IndiGo also has the "largest order book of any airline in the world" at 458 aircraft, according to aviation think tank CAPA.