The Good, Bad and Ugly: Air India's Plight Shown in Five Charts

(Bloomberg) -- Indian Prime Minister Narendra Modi is considering privatizing Air India Ltd., the beleaguered flag carrier saddled with debt of $7.7 billion and surviving on a taxpayer bailout.

Options include asking the potential buyer to absorb loans of about 200 billion rupees ($3.1 billion) linked to aircraft purchases and disposing of the carrier’s real-estate and other non-core assets worth about $3 billion before the sale, a person with direct knowledge of the matter said this week, asking not to be identified because the discussions are private.

As the Indian government is increasingly showing signs that it is prepared to cut its losses and sell the money-losing carrier, the question is whether Air India is attractive enough for any investor. The five charts below show what the airline brings to the table.

The Good:

1. What may attract investors is Air India’s fleet size. With 118 aircraft, Air India’s fleet is second only to market leader IndiGo’s, offering any investor a chance to expand in the world’s fastest growing major aviation market. Airlines typically order planes years -- if not decades -- in advance and a stake in Air India helps overcome that hurdle.

2. Air India flies the most number of passengers to and from India. Buying into the airline gives an investor a ready market, and also helps sidestep local requirements for a carrier to fly domestically before starting overseas operations, a process that may take years.

3. Slots in the nation’s main airports. One of the biggest issues in Indian aviation is capacity constraints at its main airports in Mumbai and New Delhi. Mumbai airport is already saturated and no airline can add any flights until the facility is expanded. Air India has existing slots at Mumbai, immediately allowing flights into and out of the nation’s financial capital.

The Bad

Air India’s local market share has been declining amid aggressive capacity addition by local rivals including IndiGo. The carrier’s share has shrunk to 12.9 percent from 35 percent a decade back, placing it joint-third along with SpiceJet Ltd.

The Ugly

Eventually, everything will come down to how the airline’s debt is handled by the government before a sale. Air India has been unprofitable for a decade.