The Indian government's plan to privatise the struggling flag carrier Air India could help the country's aviation sector to soar.
A group of ministers has been tasked with determining the finer details of the process, after India's cabinet recently approved the privatisation of loss-making Air India “in principle”.
“This is a long overdue decision and will be one of the most significant structural reforms in Indian aviation,” according to a research note by analysts at Capa India, an aviation advisory and research firm.
Air India is laden with debts, totalling about 500 billion rupees (Dh28.36bn). The airline has long struggled and it is widely seen as a bold move by the prime minister Narendra Modi's government to have taken the decision to sell off a stake in its national airline. Capa warns that it is not going to be an easy journey and that the government would have to write-off billions of dollars of debt in order "to make Air India an attractive investment opportunity for investors".
“We see this government being prepared to take such a decisive step in the interests of cutting its losses and creating a stronger Air India and a healthier aviation industry. If the balance sheet is cleaned up in this way, significant interest can be expected in the carrier.”
India's aviation sector is expanding amid rising incomes, as more Indians opt to fly.
India is one of the world's fastest-growing aviation markets. The number of passengers travelling by air within India last year surged by 23 per cent compared to the previous year to reach close to 100 million. But it is also a hugely competitive, indeed cut-throat market with several low-cost carriers operating alongside full-service airlines such as Air India in the battle for passengers.
Despite Air India's debts, there has already been interest in buying a stake in the beleaguered airline. Indigo, India's largest carrier by market share, within a day of the plans for a stake sale being announced, expressed its interest in forging a deal.
Some reports in the Indian press have suggested that Tata, the Indian conglomerate that owns Jaguar Land Rover and has interests spanning from steel to retail, has been mulling over the idea of investing in Air India. Tata already has a significant presence in India's aviation sector, with its joint partnership with Singapore Airline in the Indian carrier Vistara, and it also tied up with Malaysia's AirAsia to launch Air Asia India.
In fact, Air India was founded by JRD Tata, the group's former chairman, in the 1930s when it was known as Tata Airlines before it was nationalised some 20 years later.
So far, Tata has not commented on the matter.
On a conference call with investors on Thursday, Rahul Bhatia, the co-founder of budget carrier Indigo, said the company was not looking at acquiring all of Air India's subsidiaries, which include maintenance and hotel operations.
“We are interested in the airline operations of Air India,” he said. “And, more specifically, we are focused narrowly on Air India’s international operations and Air India Express. That is what we have communicated in our one-on-one discussions with government officials.
“Air India’s international operations … would provide rapid entry into restricted and, in some cases, closed international markets.”
But Mr Bhatia noted "an acquisition of Air India's international operations would require significant restructuring".
The government has yet to decide on how large a stake will be sold off. Air India, which is often referred to as “the maharaja”, after its moustachioed mascot, has the second-biggest fleet of planes in the country and is India's largest international carrier.
“As the talk of privatisation of Air India is going forward many people are discovering the hidden value of Air India,” says Satish Modh, who has three decades of experience in aviation and worked on a turnaround plan for Air India before becoming the director of the VES Institute of Management Studies and Research, in Mumbai.
Air India has been “a favourite whipping boy” of the media, he says. But Mr Modh argues it has many attributes that could make it an attractive investment opportunity.
"The airline brings with it many airport slots, offices and skilled employees as well as assets worth hundreds of crores of rupees." A crore of Indian rupees is equivalent of over US$150,000.
“Air India is the only airline in India that has jet shop facilities for aircraft engine maintenance, structural and landing gear repair facilities, avionics and accessories workshops and several hangers in key locations manned by skilled aircraft engineers and technicians.”
An IPO could be a viable option for the airline, Mr Modh says.
"Ten per cent of its shares should be sold to Air India's current and past employees and then list the airline on the stock market. Let the market discover the true value of Air India".
Still, Air India is well-known for its bloated staff numbers.
“Air India is nothing more than a crony filling state jobs programme,” says Saj Ahmad, the chief analyst at StrategicAero Research. He says that while lay-offs could make business sense following a stake sale, the government might try to discourage an investor from cutting jobs.
“The challenge with Air India is firstly getting an investor,” says Mr Ahmad. “After that, they can worry about job cuts.”
There are certain factors that could hamper interest from foreign investors.
Kingfisher Airlines, which was owned by the flamboyant tycoon Vijay Mallya, collapsed in 2012, after racking up huge amounts of debt amid a turbulent operating environment in India. It never managed to turn a profit after its launch in 2005.
“While the stunning collapse of Kingfisher will be fresh in investors' minds, they will equally be aware that Air India is debt laden and the Indian aviation market is not profitable like other mature markets,” says Mr Ahmad.
Meanwhile, Capa says Indigo's interest in Air India is “surprising” since details have yet to be revealed as to exactly what is on offer.
“No other Indian carriers have the balance sheet or resources to bid directly for Air India,” according to Capa.
“An independent assessment of Air India’s assets and liabilities is essential in order to be able to structure the offer. It is also important that foreign airlines be permitted to invest up to 49 per cent in line with the sectoral FDI caps, and not be prevented from participating as has been reported in some cases."
But Capa does believe there is the potential for a successful turnaround when it comes to Air India.
“Despite its challenges, Air India has a strong brand, an extensive network, significant experience, valuable access to airport infrastructure and slots, and an ideal geographic location for a global hub. With a clean balance sheet and a clear commercial direction, Air India has the potential to evolve into a truly world class network carrier.”
Company%20Profile
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COMPANY%20PROFILE
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Engine: 3.5-litre V6
Transmission: eight-speed automatic
Power: 290hp
Torque: 340Nm
Price: Dh155,800
On sale: now
Difference between fractional ownership and timeshare
Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45
MATCH INFO
Fixture: Ukraine v Portugal, Monday, 10.45pm (UAE)
TV: BeIN Sports
RESULTS
5pm: Wathba Stallions Cup Maiden (PA) Dh 70,000 (Dirt) 1,600m
Winner: Samau Xmnsor, Abdul Aziz Al Balushi (jockey), Ibrahim Al Hadhrami (trainer)
5.30pm: Maiden (PA) Dh 70,000 (D) 1,600m
Winner: Ottoman, Szczepan Mazur, Abdallah Al Hammadi
6pm: Maiden (PA) Dh 70,000 (D) 1,800m
Winner: Sharkh, Patrick Cosgrave, Helal Al Alawi
6.30pm: Handicap (PA) Dh 85,000 (D) 1,800m
Winner: Yaraa, Fernando Jara, Majed Al Jahouri
7pm: Handicap (PA) Dh 70,000 (D) 2,000m
Winner: Maaly Al Reef, Bernardo Pinheiro, Abdallah Al Hammadi
7.30pm: Maiden (PA) Dh 70,000 (D) 1,000m
Winner: Jinjal, Fabrice Veron, Ahmed Al Shemaili
8pm: Handicap (PA) Dh 70,000 (D) 1,000m
Winner: Al Sail, Tadhg O’Shea, Ernst Oertel
If you go
Flights
Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.
The stay
Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
The Orwell Prize for Political Writing
Twelve books were longlisted for The Orwell Prize for Political Writing. The non-fiction works cover various themes from education, gender bias, and the environment to surveillance and political power. Some of the books that made it to the non-fiction longlist include:
- Appeasing Hitler: Chamberlain, Churchill and the Road to War by Tim Bouverie
- Some Kids I Taught and What They Taught Me by Kate Clanchy
- Invisible Women: Exposing Data Bias in a World Designed for Men by Caroline Criado Perez
- Follow Me, Akhi: The Online World of British Muslims by Hussein Kesvani
- Guest House for Young Widows: Among the Women of ISIS by Azadeh Moaveni
england euro squad
Goalkeepers: Dean Henderson (Man Utd), Sam Johnstone (West Brom), Jordan Pickford (Everton)
Defenders: John Stones (Man City), Luke Shaw (Man Utd), Harry Maguire (Man Utd), Trent Alexander-Arnold (Liverpool), Kyle Walker (Man City), Tyrone Mings (Aston Villa), Reece James (Chelsea), Conor Coady (Wolves), Ben Chilwell (Chelsea), Kieran Trippier (Atletico Madrid)
Midfielders: Mason Mount (Chelsea), Declan Rice (West Ham), Jordan Henderson (Liverpool), Jude Bellingham (Borussia Dortmund), Kalvin Phillips (Leeds)
Forwards: Harry Kane (Tottenham), Marcus Rashford (Man Utd), Raheem Sterling (Man City), Dominic Calvert-Lewin (Everton), Phil Foden (Man City), Jack Grealish (Aston Villa), Jadon Sancho (Borussia Dortmund), Bukayo Saka (Arsenal)
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
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Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
The biog
Hobby: "It is not really a hobby but I am very curious person. I love reading and spend hours on research."
Favourite author: Malcom Gladwell
Favourite travel destination: "Antigua in the Caribbean because I have emotional attachment to it. It is where I got married."
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Arrogate's winning run
1. Maiden Special Weight, Santa Anita Park, June 5, 2016
2. Allowance Optional Claiming, Santa Anita Park, June 24, 2016
3. Allowance Optional Claiming, Del Mar, August 4, 2016
4. Travers Stakes, Saratoga, August 27, 2016
5. Breeders' Cup Classic, Santa Anita Park, November 5, 2016
6. Pegasus World Cup, Gulfstream Park, January 28, 2017
7. Dubai World Cup, Meydan Racecourse, March 25, 2017
UAE and Russia in numbers
UAE-Russia ties stretch back 48 years
Trade between the UAE and Russia reached Dh12.5 bn in 2018
More than 3,000 Russian companies are registered in the UAE
Around 40,000 Russians live in the UAE
The number of Russian tourists travelling to the UAE will increase to 12 percent to reach 1.6 million in 2023
MATCH INFO:
Second Test
Pakistan v Australia, Tuesday-Saturday, 10am daily at Zayed Cricket Stadium, Abu Dhabi
Entrance is free
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The specs
Price: From Dh180,000 (estimate)
Engine: 2.0-litre turbocharged and supercharged in-line four-cylinder
Transmission: Eight-speed automatic
Power: 320hp @ 5,700rpm
Torque: 400Nm @ 2,200rpm
Fuel economy, combined: 9.7L / 100km
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
The Light of the Moon
Director: Jessica M Thompson
Starring: Stephanie Beatriz, Michael Stahl-David
Three stars
Men's football draw
Group A: UAE, Spain, South Africa, Jamaica
Group B: Bangladesh, Serbia, Korea
Group C: Bharat, Denmark, Kenya, USA
Group D: Oman, Austria, Rwanda
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners