[Jeroen]

Originally Posted by dragracer567

The only problem is the debt (the buyer only needs to take on the debt for the planes which is normal for the industry) and bureaucracy (which a simple restructuring will solve).
.

In my experience, that is not correct. It is not Air India specific, or even aviation industry specific.

Yes, of course a potential buyer needs to fix the debt somehow. But companies get themselves into trouble for multiple reasons and in the end it shows up in the P&L and the balance sheet. So poor finances tend to be a symptom, not a cause.

If you buy a company you need to be able to address and fix the root causes for the losses in the first place.

V.Narayan made a very valid point about the staff, unions etc.

I have been involved in a number of mergers / acquisitions over the years all over the world. A deal that comes with to many strings attached tends to be a bad deal. (Not just staff and union, but the sellers might want to pose other restriction on you, like which routes to fly for what price for how long.)

You need to be able to overhaul every aspect of a company the way you see fit, in the time frame you see fit.
If you can’t due to may restriction being imposed, directly or indirectly, walk away from it.

Too many restrictions and you will end up with an identical poor financial result.

Jeroen

[Sutripta]

Originally Posted by V.Narayan

On their own Air India and Indian Airlines did much better than in this forced marriage and the extra-ordinary degree of politically motivated willful sell out of routes that took place in the last decade.

And before that, in an attempt to please all (foreign power blocs), Air India went with Boeing, Indian Airlines with Airbus. And then it was decided to merge both!

My personal feeling is that AI+IA was deliberately run into the ground (even more forcefully), and the customer experience was deliberately made bad, so that when it would be sold (ie cherrypicked), the twitterati would be all for it. And we say politicians lack (longterm) business strategy!

Regards
Sutripta

[aashishnb]

I guess the other countries that chartered the aircrafts paid for it.


Here, AI being government owned, there may not have been a separate payment and therefore the amount goes into the P&L of the airline and shows the loss that we see.


Of course, this will be like a very very minuscule part of the total losses, but just saying!

[RahuKetu]

Originally Posted by DrPriyankT

More than selling it, I too am in favor of shuttering it, along with non performing PSU's like MTNL and BSNL. We are a country which is short of money and we cannot put money down the drain trying to prop them up.

PSU's if managed well like NTPC, SAIL, NMDC and ONGC can be good profit making entities for the government and their growth should be encouraged, but loss making ones like the ones I mentioned above, have no right to stay alive on tax payer money for such a long time.

Problem is that who will buy loss making PSUs? Government has tried multiple times but has failed miserably to sell these loss making PSUs. The well managed PSUs like NTPC, ONGC etc. are being sold regularly every year or two years by way of stake sale. Look at the percentage of government stake in top PSUs year after year. It has come down to 50% in some PSUs.
So what is happening is that we are selling profitable businesses to private players because everybody wants to buy them and sick PSUs are getting sicker day by day. Profit of NTPC is nearly 10000 Cr. per year. Government gets good amount of money by ways of profit & dividend from NTPC. It is not good to sell profit making businesses in the name of disinvestment.

Now the second point - Loss making PSUs like BSNL.

How can one good company having all India presence can becomes loss making? Its not due to the staff. After having worked both for public sector & private sector for about 8 years each, I can say that PSU employees are very knowledgeable, hardworking & talented. Its due to the tough entrance exams that the best get selected. Moreover the training provided in NTPC is far better than any other power generation company in India spanning for an year. Many private companies are headed by ex-public sector employees.

Then, How do PSUs make losses?

First point which comes to my mind is lack of freedom to run the company freely & too much government interference. PSUs are pressurized by ruling political parties to set up plants and facilities at those locations which are loss making. Take the example of BSNL. If BSNL was private, had it invested so much in Laddakh, Spiti & Nort East region where population is sparse? Are people heading BSNL are so foolish that didn't knew the fate of such projects beforehand? When one of our ex-prime minister was member of upper house in parliament from Assam, then NTPC was told to put up a power plant in Bongaigaon which was naxal affected area and not economically viable also.

I am not blaming the politicians too on such decisions.If governments start working like private sector eyeing ROIs on each project then Who will develop far flung areas? Can government schools & hospitals can be run on ROI model?

Now what is the solution?

First & foremost, If government forces any PSU to set up an economically nonviable project then government should provide gap funding to the PSUs such as BSNL to run mobile network in Laddakh or North East.

Second reason for failing of PSUs is that when the turn comes to make some money or put in some good investments for PSUs then corrupt politicians collude with private players and frame the policies in such a way that PSUs are not able to compete. I came through an interview of EX-BSNL CMD in outlook some 7-8 years ago where he clearly stated that then NDA government denied them resources & money to upgrade their infrastructure when it was the most crucial time to start 2G operations & mobile internet/telephony services were about to bloom to benefit 500 Rs. phone provider private company. Most of you might be aware that BSNL is denied 4G spectrum till recently when we are looking at launch of 5G technology.

It is not the clerk, Front desk employee or for that matter any employee which fails the company. It is the top down approach which makes or breaks any business. Culture flows from top to bottom & not from bottom to top.

[Malyaj]

I started my career in 2002 in a large diversified Indian company, which at that time had acquired one of the PSUs as part of the government's disinvestment drive. For 2 years I worked in mixed team, i.e. a team which had staff from both the companies. The dynamics at work were extremely interesting and a huge learning experience. Over the years I had a chance to interact (if not directly work) with personnel of various PSUs. I can safely conclude the following:

1) PSU staff are a mixed bag, with some hidden gems who joined the PSU because private companies did not operate in that sector during the time they entered the job market.

2) Contrary to what many think, some PSU staff themselves are victims of bureaucracy in their own companies. Such people were actually relieved that their company was taken over and rigor was introduced

3) People who are open to change and work hard are absorbed seamlessly in the new organization. This is grudged by their old colleagues who view them as 'traitors'. But these grudging types have little voice in the new structures.

4) It is incorrect to believe that PSUs do not have good practices. Some of their practices may actually be simpler and more effective compared to the acquiring company's which may be unnecessarily complicated.

5) The culture is created over the years and the response of the staff varies. Some decide at the outset that they will not work in the new set up and take VRS (if on offer) or simply quit. Some grudgingly adjust to the change and continue whining in their old groups but cause no nuisance. Some are aggressive and confrontational and cause friction. Some adapt to the change very well and become high contributors. One thing remains constant, the acquiring company will not bend to their will.

6) The acquiring company has a huge role to play in the transition. There is no point being cocky and acting all superior. What gets things done eventually is empathy, respect, patience and training.

7) In the end most people want to be meaningful contributors. The indifferent attitude and lack of customer orientation we see in PSU staff comes partly from not having done enough meaningful work over the years. This itself comes partly from over staffing and role dilution. HR departments in these companies are basically an evolved version of industrial PR departments where primary work is attendance monitoring, payroll management and token performance review exercises.

8) At senior level PSUs have highly competent staff who fully understand why things are a mess. During their careers their efforts for real change would have been thwarted by unions, large clerical workforce who cannot see any merit in change, ill-suited GOI secretaries who run their own agenda and in the end lack of any reward for all the headache.

9) PSUs pride themselves in being family oriented companies. What this means is that their families bond after work (partly due to company quarters), their children get to visit the facilities, there is an emphasis (one may say over emphasis) on celebrating all festivals and respecting family life. The loss of this feeling is one of the biggest dreads that employees have when their organization is being taken over. Ironically, new age companies are becoming more like PSUs in this aspect!

10) Finally, my biggest learning was this - My company managed the acquisition very well because it integrated the staff rather than running it as a separate unit. All departments were merged with their counterparts, transfers were effected so that no unit or department was dominated by the old team. Divide and rule policy was successful and eventually beneficial to all. By the time I left the company almost all differences were ironed out, people understood and appreciated differing points of view, new friendships were forged but old ones still remained strong. There were casualties along the way, but I hope those people found more meaningful things to do in life.

[Sutripta]

Originally Posted by RahuKetu

Problem is that who will buy loss making PSUs? ...
It is the top down approach which makes or breaks any business. Culture flows from top to bottom & not from bottom to top.

A couple of points-
Comparing the run of the mill PSU with NTPC is unfair! NTPC is professional, and tough. On both its own people, and its vendors. You have to perform. 'Chalta hai' is not tolerated.

The Bongaigaon plant is actually at Salakati. NTPC does not touch plants that small. And normally prefers its own greenfield projects. This as you rightly said was a because of MMS. No naxal problems. Some Bodo problems. Not really affecting the only two large units there - BRPL and BTPS.

BSNL (cellular) was held back. Not allowed to compete. Might still have come a cropper though even if not held back.

Regards
Sutripta

[RahuKetu]

Originally Posted by Sutripta

A couple of points-
Comparing the run of the mill PSU with NTPC is unfair! NTPC is professional, and tough. On both its own people, and its vendors. You have to perform. 'Chalta hai' is not tolerated.

The Bongaigaon plant is actually at Salakati. NTPC does not touch plants that small. And normally prefers its own greenfield projects. This as you rightly said was a because of MMS. No naxal problems. Some Bodo problems. Not really affecting the only two large units there - BRPL and BTPS.

BSNL (cellular) was held back. Not allowed to compete. Might still have come a cropper though even if not held back.

Regards
Sutripta

Worked in NTPC for some years myself. Wouldn't like to further comment. What NTPC does & what not, i don't know much. As a ordinary person, I couldn't make out difference between BODO problems and Naxal problems.
I stand corrected. I was not posted there. I had only my batchmates & vendors who told about these problems.

[Nissan1180]

The plight of Air India is not due to the pilots or the support staff but due to the politically driven mismanagement.

Singapore Airlines, Quatar and Emirates are the benchmarks of successful airline businesses and they are owned (at least partially) by the respective governments. In India, privatisation has been seen as a panacea for all industries, without results. The stock prices of companies like Vedanta which thrived on PSU assets earlier are a reflection of this failure. Bad management ruins public and private companies alike.

Getting professionals to run the airline without corrupt cronyism would have ensured the success of the company.

Getting political sycophants to the board is a phenomenon that started soon after the company was nationalised and continues till date. Air India was literally stolen from the Tatas. You can read about it in JRD Tata's biography (Beyond the last blue mountain by RM Lala).

It is no wonder the same bureaucracy salivates at the prospect of a fire sale for PSUs. After all, they did nothing to build the companies, and care nothing about their future. Ironically, some of the best engineers in India (perhaps in Asia) are in Railways, Air India, BHEL, IOCL etc. It is sad that despite having the talent, the company is not able to perform.

[MaxTorque]

I strongly believe this news could be another ploy to under value Air India so that someone close to decision makers can grab it for throw away price.

[theflyingguy]

With the recent development, it seems like Tata group will emerge triumphant in the bid for Air India.

Merging Air India express with Air Asia will be a good move and will give a strong foothold and international slots to Tony Fernandes. Unless there is some material to the corruption scandal between Airbus and Air Asia, Air Asia should be able to take over fleet, key landing rights and let off the rest turning accounting books into green almost immediately.

Air India could as well be operated as a JV between Tata and Singapore Airlines to serve the long haul & ultra long haul markets. Air India has few slots worth their weight in gold and by reducing or nullifying the loss making regional slots or handing them over to LCC, Air India would be able to turn it's fortunes around. With SIA at the management, Air India would be able to make a quick change into on time performance, crew performance and other performance indicators which would result in significant cost savings & increased customer base.

Some middle eastern airlines are also interested but their effort will likely fall short in front of a joint bid by SIA, Tata and Air Asia.

[wheelguy]

https://www.moneycontrol.com/news/bu...t-4901461.html

Tatas already had Vistara and Air Asia, then how can the debt ridden Air Inda add to their business.

[shortbread]

Originally Posted by wheelguy

https://www.moneycontrol.com/news/bu...t-4901461.html

Tatas already had Vistara and Air Asia, then how can the debt ridden Air Inda add to their business.

Already set international routes and airport slots, the most precious commodity in airline operations. It will take Tata decades to build such a network.

Albeit Air India and it's legacy issues, a very high price indeed.

[RahuKetu]

Union Power Minister R K Singh on Thursday wondered why there is a movement in India against public sector units, which have laid the foundation of the country's growth.


Speaking at the inaugural session of NTPC's 'Indian Power Station (IPS) 2020' conference being held here, Singh said NTPC is one of the principal foundations of the electricity system in our country. Because of this, we can ensure that power is avai...

Read more at: https://www.deccanherald.com/nationa...gh-804328.html

[V.Narayan]

Originally Posted by RahuKetu

Union Power Minister R K Singh on Thursday wondered why there is a movement in India against public sector units, which have laid the foundation of the country's growth.


Speaking at the inaugural session of NTPC's 'Indian Power Station (IPS) 2020' conference being held here, Singh said NTPC is one of the principal foundations of the electricity system in our country. Because of this, we can ensure that power is avai...

Read more at: https://www.deccanherald.com/nationa...gh-804328.html

Despite what I have said about Air India I tend to agree with him where Navratna PSUs are concerned. They have contributed immensely to national development. All PSUs cannot be coloured with the same brush just as all private sector companies cannot be tarred with the same brush. Air India cannot be compared to NTPC. NTPC is light years ahead. For every Air India there is an NTPC, BEL, Maz Docks. Having seen Air India at close quarters I believe, and I may be wrong, that in Air India the corrosion of attitudes and culture has gone too deep. Changing the CEO from one IAS generalist to another is not going to solve deep rooted broken processes and culture.

[V.Narayan]

I hear from reliable sources that the Tata's have told the Govt that they will be interested in offering a serious bid for Air India jointly with Singapore Airlines. Given who the Tata's are the Govt make even come down from its lofty perch and listen to the practicalities of implementing this. Fortunately Puri is a far more competent Civil Aviation Minister than his predecessor. This story just might end happily for all including the employees.