ET View: The bankruptcy route for Air India

If the government is unable to sell Air India as a going concern with the conditions it has attached, let it meet the fate reserved for any company that is unable to service its debt. If the airline can keep debt service going, it can stay afloat. If it cannot, the government should make it clear that it will not bail it out and that creditors are welcome to take the bankruptcy route.

If the government is unable to sell Air India as a going concern with the conditions it has attached, let it meet the fate reserved for any company that is unable to service its debt. If the airline can keep debt service going, it can stay afloat. If it cannot, the government should make it clear that it will not bail it out and that creditors are welcome to take the bankruptcy route.
If the resolution professional can succeed where the government could not – and he might, since the conditions on residual ownership, etc, would not remain – well and good. But if it cannot be sold as a going concern, let it be liquidated and its individual assets sold: the planes, the real estate, its valuable bilateral rights, its prime landing slots at airports in the country and across the world and its beloved mascot, the Maharajah.
The shareholder, the government, is unlikely to get anything, except to get a burden off its back. At least, Air India would cease to be a drain on its resources. And other sick public enterprises would know what to expect and stage a turnaround or be prepared for their fate.
01/06/18 Economic Times

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