Bailing out Air India is just the first step

Air India stewardess.jpgSo is this a case of throwing good money after bad? India’s government says that it will provide Air India with 50 billion rupees ($1.1 billion) as part of an equity infusion due to the state-owned carrier’s financial woes.

In today’s Financial Times, one analyst said that this is too little and too late given how fast Air India is burning cash. “I don’t think any amount of money would last very long at Air India,” he added.

Getting the equity infusion is fine, but it would mean nothing if India’s bureaucrats decide to be slack when it comes to restructuring Air India. Nothing short of an overhaul of the airline’s operations will result in it returning to profitability that can be sustained.

The government bail out may have been the easiest part of the hard work ahead for Air India.



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