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. While he has exuded confidence in a communication to staff who have signed up to be part of the consortium, the plan already faces strong opposition from company pilots, who view management with suspicion.
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Mallik and 218 other employees have submitted an expression of interest (EoI) to bid for the airline, in response to the government-issued Preliminary Information Memorandum (PIM). Separately, the Tata group and a US-based fund (run by Indian-born executives) called Interups have also filed EoI.
In early January, the government will announce the parties that have qualified for the tender. The actual battle for the airline will unfold later.
But how does Mallik plan to acquire a gigantic airline burdened with biblical amounts of debt to a gang 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, Mallik 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 it praises the collective effort and vision of the group that has allowed them to put forward a candidacy for “our Palace in Heaven”.
Answer the questions of mintMallik said the employee consortium’s offer was separate from those of Interups Inc. and the Tata group. She did not respond to other questions and declined to be interviewed.
However, Interups, which has submitted an EoI for Air India, is interested in partnering with the airline’s employee consortium, Laxmi Prasad, the company’s president said in an earlier interview. 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 voluntary and continuous employees in the consortium acquired by the airline. No capital investment is required, “Prasad said.
But little is known about Interups, a fund that primarily manages the wealth and retirement of high-net-worth nonresident Indians.
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 on condition of anonymity, noting that the airline National has about 10,000 permanent employees on its rosters.
Mallik’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 their members to do not participate in the offer.
“Most of the members of the bidding consortium are not directly involved with the operations of the airline. In addition, pilot agencies such as ICPA and IPG seek to reverse the huge pay cuts and immediate payment of arrears by the administration. Considering that many in the tender consortium are part of the administration and have accepted a pay cut of the same name of 10% or so, compared to the 50-70% pay cut for pilots, and we have not done nothing for the pilots, we have asked the pilots union that the members stay away from the offers, “said a senior airline pilot who requested anonymity.
While there is no shortage of naysayers, if Mallik is able to enlist the support of a significant section 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 ₹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.
trainee to the boardroom
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 Mallik, was an Indian Administrative Services (IAS) official in 1961, who held high-level positions in the Odisha government. His mother, Rajkumari Mallik, was a doctor.
Most recently, he played a key role in Air India’s Vande Bharat mission.
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