National carrier Air India, on the brink of its second attempt at divestment, can break even for the first time in a decade thereby delivering a positive foundation for privatisation, aviation advisory firm CAPA said on Thursday.
"If the government pursues 100 percent divestment, moves all working capital debt into an SPV, and permits bidders greater flexibility with labour rationalisation, Air India may find a suitor this time around given the improved competitive dynamics resulting from Jet’s exit," CAPA India said in its quarterly market insights for April-June.
However, issues related to the treatment of debt and labour flexibility will still need to be addressed if serious bidders are to be attracted, CAPA added.
In the interim, CAPA expects that the national carrier may expand both its narrowbody and widebody operations by taking aircraft on lease.
"Air India will continue to face strong competition on domestic routes, but now that it has emerged as the largest carrier on overseas routes - where capacity is constrained -international operations could prove to be lucrative," CAPA added.
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