IA privatisation drive moves in low gear

Another setback to the process is the lack of a leader for the domestic carrier, Indian Airlines, which has posted a net of Rs 14.5 crore in the fiscal ended March 31st 2000 to take the privatisation process through. By this month-end, the present incumbent, Anil Baijal is retiring. Thus, the focus of the ministry bureaucrats is to get the coveted post instead of making any serious efforts on privatisation.

The financials of Indian Airlines, meanwhile, is continuously deteriorating which will result in getting lower valuation of government’s stake, say officials. Against an equity base of Rs 105.19 crore, the company had run up long term loans of around Rs 2,800 crore. The present debt equity ratio of 1:19 is alarmingly high which has imposed a very heavy burden of debt servicing on IA with its interest payments at almost Rs 200 crore for the year ended March 31, 1999.

Though long term loans of the carrier is now down to Rs 2,041 crore for the year ended March 31, 1999, the airline will find it difficult to get a buyer if the roadblocks continue.

Lack of fleet expansion is also costing the airline its market share and revenue. While the private airliners are busy expanding fleet, Indian Airlines has last purchased aircraft in 1985. In fact, the managing director of its 100 per cent loss making subsidiary, Alliance Air, Ron Nabar put in his papers citing “risky” aircraft in operations. Alliance Air operates about 10 Boeing 737s which are more than 20 years old.