1. Air India privatisation: High hopes?

Nine months after the Union Cabinet’s in-principle nod for offloading the government’s stake in Air India, the ball has finally been set rolling to privatise the bleeding airline. A preliminary information memorandum was unveiled last week by the Civil Aviation Ministry for prospective bidders. According to this, the Centre will divest 76% of its stake in AI. A 100% stake is being offered in its subsidiary Air India Express, and a 50% stake is on offer in its ground handling operations arm. Other subsidiaries, such as Alliance Air, Hotel Corporation of India, which owns the Centaur properties in New Delhi and Srinagar, Air India Air Transport Services and Air India Engineering Services, are not being sold — they will be transferred to a special purpose entity along with roughly a third of AI’s ₹48,781 crore outstanding debt. Effectively, the government is offering a majority stake in AI and AI Express with management control, as well as a cumulative debt burden worth ₹33,392 crore. For prospective buyers, the attractiveness of AI’s international flying rights and slots would be offset by the possibility of taking on so much debt and putting a plan in place to whittle it down or refinance the loans. Details of the reallocation of these liabilities between AI and AI Express, and the logic behind it, will only be shared with bidders at a later stage when requests for proposals are issued. Given the uncertainties over its debt burden, it will not be a surprise if those bold enough to make a bid for AI find it difficult to offer a lucrative price to the government. It is worth pausing to see if serious investors are enthused by the government’s decision to retain 24% stake in the airline (which will possibly come with one or two bureaucrats nominated to the airline’s board of directors). In 2016-17, the airline suffered a net loss of ₹5,765 crore, owing mainly to its high interest costs. While debt has been the major reason for AI’s losses in recent years, operational inefficiencies and poor management have been bugbears for long. The government is expected to offload its residual 24% stake at a later date, pinning its hopes on a better valuation after the new owner has fixed the airline’s legacy issues. The real benefit of privatisation will be that the airline will no longer drain taxpayer funds, after thousands of crores have been infused over the years to keep it up and running. That its new owner would get some room to rationalise its large workforce a year after the transaction and the government is thinking of footing the bill for some benefits paid to retired employees, such as complimentary air tickets, sounds good. The government is understandably keen to close the AI sale transaction soon, preferably by early 2019, in order to bolster its reformist credentials. But investors will look for the finer details to ascertain the carrier’s true worth.


1) In-principle

Meaning: As a general idea or plan, although the details are not yet established.

Example: “the government agreed in principle to a peace plan that included a ceasefire”

2) Offloading

Meaning: Unload (a cargo).

Example: “a delivery could be offloaded immediately on arrival”

Synonyms: Unload, Discharge

3) Bleeding

Meaning: Used for emphasis, or to express annoyance.

Example: “the watch was a bleeding copy”

4) Cumulative

Meaning: Increasing or increased in quantity, degree, or force by successive additions.

Example: “the cumulative effect of two years of drought”

Synonyms: Accumulative, Progressive

5) Whittle it down

Meaning: To gradually reduce the size of something or the number of people in a group.

Example: We had 80 applicants for the job, but we’ve whittled them down to six.

Synonyms: Less, Smaller

6) Bidders

Meaning: A person or organization making a formal offer for something, especially at an auction.

Example: “she was the highest bidder for this rare portrait”

7) Lucrative

Meaning: Producing a great deal of profit.

Example: “a lucrative career as a stand-up comedian”

Synonyms: Profitable, Gainful

Antonyms: Unprofitable

8) Bugbears

Meaning: A cause of obsessive fear, anxiety, or irritation.

Example: “the biggest villain is that adman’s bugbear, saturated fat”

Synonyms: Hate, Bane

9) Pinning

Meaning: Hold (someone) firmly in a specified position.

Example: “She was standing pinned against the door”

Synonyms: Restrain, Press

10) Infused

Meaning: To cause someone or something to take in and be filled with a quality or a condition of mind.

Example: His landscape paintings were infused with a warm, subtle light.

11) Rationalise

Meaning: To make a company, way of working, etc. more effective, usually by combining or stopping particular activities, or (of a company, way of working, etc.) to become more effective in this way.

Example: The recession is forcing the company to rationalize.

12) Footing the bill

Meaning: A request for payment of money owed, or the piece of paper on which it is written.

Example: Her mother agreed to foot (= pay) the bill.

13) Bolster

Meaning: To support or improve something or make it stronger.

Example: More money is needed to bolster the industry.

Synonyms: Support, Improve

14) Reformist

Meaning: Supporting or advancing gradual reform rather than abolition or revolution.

Example: “the reformist policies of the government”