The Centre is bullish about the IA deal despite union protests
Its been less than two weeks that the Centre started Indian Airlines (IA) privatisation. Yet, disinvestment secretary Pradeep Baijal gives the impression that the deal will be a sureshot hit. He isnt even ready to acknowledge vociferous protests from a 16,000-strong trade union.
"Well make the shareholders agreement extremely attractive. Private companies are aware of it. The interest is tremendous," Baijal claims. "The Centre is optimistic about some NRI offers," he adds.
Indeed. The Centre is processing the papers at breakneck speed. For example, the exercise to find a global advisor to chart out the process was expected to be completed in 10 days, well ahead of the March 31 deadline. And, even before advertisements could be issued for the advisor, the inter-ministerial group-comprising representatives of ministries of finance, industry, economic affairs and administrative affairs and the airlines chairman-has started getting feelers from a host of corporate giants.
"At least three top companies have evinced interest for picking up the 26 per cent stake which could be close to Rs 3,500 crore," sources claim. Although officials are tightlipped over the prospective bidders, the grapevine has it that the Tatas, who had a bitter experience with the Bangalore airport project, and liquor baron Vijay Mallyas UB Group are frontrunners. Among the two major private airliners, Jet Airways had said it was not interested while Sahara boss Subroto Roy reportedly has an "open mind".
What would be the deals immediate fallout? Sources say there are already plans to lay off an estimated 4,000 people (of the current 22,000 staff strength). This would be done once the Centre sets the retirement age for IA staff at 58 years. Besides, there are plans for a five-year job freeze. "Four categories of staff-cabin crew, engineering, security and pilots-will be under less pressure. But god help the rest," sources add.
Huge infrastructure, massive networking and estimated assets worth Rs 10,000 crore make the IA a lucrative buy. The government is also open to the option of writing off a portion of the airlines total accumulated losses (roughly Rs 600 crore).
But does the current mood in the corridors of power mean the unions are losing steam? Perhaps. Samaresh Basu Ray, president of the Calcutta-based Air Corporation Employees Union, feels it will be difficult to checkmate the government. "We have been protesting for nearly two years. The future seems bleak but well try nevertheless," he says, citing the example of an Indian turning around the ailing United Airlines-one of the worlds biggest airlines-into a profitable venture.
"Why not plan things better? Why run flights in the morning from north when you know there will be fog and delays and you will incur expenditure on hotel accommodation?" he asks. "Why not get new aircraft? Who pays the bills for the Gulf evacuation? For the Vayudoot merger? For the flights to Orissa during the cyclone? The Centre will get the funds to overcome the fiscal deficit all right but then the social face will die fast. After all, the private airliners didnt rush their planes to Bhubaneshwar for relief. Nor do they operate in the Northeast," he adds.
But is anyone listening?