Meenakshi Mallik, who sits on the flag carrier’s board as a director (commercial) and has worked for the airline for 31 years, is the face behind the employees’ offer to acquire Air India. She and 218 other employees have filed an expression of interest (EoI) for the airline, in response to the government-issued Preliminary Information Memorandum (PIM).
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While she seemed confident in a communication to employees who have signed up to be part of the consortium, the plan faces strong opposition from the company’s pilots, who view management with suspicion.
Separately, the Tata Group and a US-based fund called Interups, managed by executives of Indian origin, have also filed EoI. In early January, the Center will announce the qualified bidders. The battle for the airline will unfold later.
Rank up
Mallik joined Indian Airlines as a management trainee in 1989 in Kolkata. He studied at Odisha and has a BA (Honors) in Physics and an MBA from Utkal University. His father, Upendranath Malik, was an IAS officer from 1961, who held high positions in the Odisha government. His mother, Rajkumari Malik, was a doctor.
Most recently, he played a key role in Air India’s Vande Bharat mission.
But how does Mallik plan to acquire a gigantic airline saddled with staggering debt to a smorgasbord of colleagues?
The answer has two parts. One is partnering with a private equity fund that will finance the offering and allow employees to retain control of the airline. Second, employee support will be the biggest political obstacle in the privatization offer. Partly because of this, the government has incorporated adequate provisions into the PIM to allow an employee-led consortium to take control of the airline. A consortium that has the support of employees is more likely to be able to effectively take control and run the flag carrier successfully.
In a recent letter to his group members, Malik had detailed the plan: “Due to the support we will receive from the financial partner, I anticipate that each of us will have to make a contribution of no more than ₹1,00,000 ( ₹1 lakh), to bid on the company, this is a detail that I will be in a better position to pass on to everyone once we have passed the initial stage of the EoI. “
Mint has reviewed a copy of the letter, in which he praises the collective effort and vision of the group that has allowed them to consider an offer for “our Palace in Heaven.”
Responding to Mint’s questions, Mallik said the employee offering was separate from those of Interups Inc and Tata Group. She did not respond to other questions and declined to be interviewed.
However, Interups, which has submitted an expression of interest (EoI) for Air India, is interested in linking up with the airline’s employee consortium, Laxmi Prasad, the company’s president told Mint. The company is ready to offer 51% of the airline’s stake to the employee consortium, provided it wins the tender, he said, in response to messages seeking comment.
“51% will be offered to willing and continuing employees in the consortium that the airline acquires. No capital investment is required,” said Prasad.
But little is known about Interups, a fund that primarily manages the wealth and retirement corps of nonresident Indians from the high net.
Air pockets
However, Mallik’s plan has not gotten off to the best start. For one thing, not many employees have joined the consortium, although it is unclear whether the group has been kept small by design for the initial stages.
“Only a small number of employees (219 in this case) came out to bid as it probably didn’t make sense for others to join the consortium,” said a senior airline official, speaking on condition of anonymity. noting that the national airline has about 10,000 permanent employees on its rosters.
Malik’s offer has also faced opposition from the airline’s two big pilot unions, the Indian Commercial Pilots Association (ICPA) and the Pilots Guild of India, (IPG), who have asked to its members who do not participate in the offer. .
“Most of the members of the tender consortium are not directly involved with the operations of the airline. Furthermore, pilot bodies such as ICPA and IPG are seeking to reverse the huge pay cuts and immediate payment of arrears by management. that many in the tender consortium are part of the management, and we have accepted a homonymous pay cut of 10% or so, compared to the 50-70% pay cut for pilots, and we have not done anything for the pilots We have asked the pilots union members to stay away from the bidding. ” said a senior pilot for the airline, who requested anonymity.
A banker, who also spoke on condition of anonymity, said the challenge with a consortium of employees to acquire the airline was not just capital but also management bandwidth. “I think that even if they can raise capital, these consortia lack management bandwidth. It is no small thing to run an airline, as you need not only a lot of money, but also a lot of experience running something so big in an industry that is volatile, “said a senior banker at a large public sector bank.
While there is no shortage of naysayers, if Mallik can enlist the support of a significant number of employees, he could emerge as a key figure in forming a viable consortium.
As it stands, there is little clarity on what form the final offer will take, as the government has yet to spell out the exact contours of the airline’s debt restructuring. Air India’s net debt as of March 2019 was huge ₹58,255 crore, of which ₹Rs 29,464 crore has been transferred to a special purpose vehicle, or a company created for a specific purpose, in this case, the restructuring of the airline’s assets.
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