Air India cannot be turned around !!! Period.
Every problem does not have a solution. The seeker can be genius. He can have the most brilliant business track record. Yet he can’t solve every problem.
World hunger has no known solution. Terminal cancer kills you. Everyone dies.
All that brilliance can do is maybe delay the inevitable. But that too usually has considerable cost.
Tatas went about aviation the wrong way. They started with a wheeling dealing approach. First they got a genius called Nira Radhia to make their aviation strategy. As a former air hostess she knew a lot about strategic moves !!! Then they got Deepak Talwar as their super advisor. He does a good job of running the duty free shops at the airports. And runs the Holiday Inn at Aerocity very well. But can proximity to the aviation minister be the sole reason for brilliance. It didn’t stop there. Then they got to Bhatia san. Bhatia san was a player of great standing. His son was married to LN Mittal’s daughter. Remember the Versailles Palace marriage. Tatas got into a fixing deal with him to set up an airline.
Then they had guilt pangs and Cyrus Mistry tried to clean up the act. And thus came Vistara as a JV with Singapore Airlines. They did manage to pull off a mini Kingfisher with a slight luxury positioning vis a vis the mass market Indigo and a dhobi ka kutta Go Air. The confused SpiceJet helped matters and Vistara lost very little money.
For the airline industry, not losing money and sleep is a good sign. Look at all the players till now. Damania, Sahara, Kingfisher, Jet Airways, Go Air. It is not inbetween. It is 0 or 1. And so far it is all zero.
The 1 is for Airbus and Boeing who make a lot of money. And Indigo bought planes cheap so they benefit from smart operations … but more from selling the planes they bought in the premium market. Akin to booking a Maruti and then selling it when you got delivery.
Air India cannot be turned around.
Just like Vodafone. Any delusions to the contrary will lead to even more unpleasant surprises. Tatas have to somehow get out.
You don’t need a turnaround plan.
You need an exit route.
Maybe govt will take mercy and give some juicy defence contracts to make up. Like making 80,000 crore submarines on cost plus basis. Or just buy ebuses at 3x of Chinese prices. The problem is there isn’t much available from the Tatas for the govt to buy. How much Tata salt for example can the armed forces buy.
But for now the govt gave Mr Chandrasekhar a Rs 40,000 medal called the Padma Bhushan and put a Rs 40,000 crore pa loss goose around his neck. The medal is his and Mr Tata has got saddled with the loss.
The ONLY asset of Air India is its loss. And that could help offset tax for say TCS. But how would you do that.
An AIF structure for Tata Sons can solve some problems. But not Air India.
Best to be sensible and walk out of Air India transferring their equity to the ESOP Trust. It is called leveraged Management Buyout (MBO)
