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Air India Likely To Get An Overseas CEO : Report

Air India, TATA Sons, Vistara

For the position of Air India CEO, Tata Sons, the largest conglomerate in the country, is said to have picked a few individuals with worldwide aviation expertise, including several CEOs of major global airlines. Senior authorities close to the situation informed the daily publication Economic Times that the firm may get an Expat  CEO.

N Chandrasekaran, the chairman of Tata Sons, has also sought Ratan Tata’s advice in selecting the CEO.

“Tata has great connections in the global aviation sector, too, and his suggestions are expected to lend heft to the CEO-hiring talks,” a senior group official said. 

As per many analysts, it will be crucial for Tata Sons to staff a new set of executives, including a CEO, who can sketch a plan on how to restructure the troubled airline, reduce the debt burden, and raise capital to keep it.

As per the report, the insiders told the publication that the search for the CEO began already in the early stages. “To steer its aviation business, execution capabilities will be critical,” a group official said.

At present, there is no CEO for Air India and Rajiv Bansal, its chairman and managing director, is an Indian Administrative Officer ( IAS) plus the Civil Aviation Secretary.

Last week, Tata group won the bid for an enterprise value of Rs 18,000 crore, higher than SpiceJet chairman Ajay Singh-led consortium’s which offered Rs 15,100 crore.

Vihang Virkar, the aviation law expert and partner at PDS Legal, said to the financial daily that as India’s flagship carrier, Air India runs on international routes with over 900 landing and parking slots in overseas locations.

Air India is a partner of Star Alliance, a global alliance of prominent international airlines. “Many of Air India’s important suppliers are large international companies, such as Boeing, Airbus, CFM, etc. Given this significant global exposure, it is important for the CEO of the company to have international experience,” told Virkar to ET.

For the past many years, Air India’s international operations have been more cost-effective compared to its domestic operations as per Virkar. “Someone with strong international experience could, I am sure, capitalise on these overseas landing rights and expand the remunerative international business even more,” he said.

CEOs with a finance background have always been a top priority of many international airlines as they find them, suitable candidates, to deal with financial complexities and thin profit margins.

Tata Sons is setting up a short-term advisory team composed of key Tata Group executives, including board members, global aviation specialists and some top Air India officials. Talace, a wholly-owned subsidiary of TATA Sons, won the bid for 100%  acquisition of Air India. 

Air India flies to 102 local and international locations with a fleet of Airbus and Boeing aircraft. It presently has a fleet of 128 aircraft, with 79 narrow-body planes and 49 wide-body planes. Its fleet also comprises 25 Air India Express flights and 19 Alliance Aeroplanes, for a total of 172 planes.

With the acquisition of Air India, the Tata Group now holds almost a 25% market share in the domestic aviation sector. Talace, a fully owned subsidiary of TATA Sons,  already manages Vistara and AirAsia as joint ventures.

“Air India has predominantly been led by individuals from the administrative services and who have a background of working within the government machinery. As Tatas look to transform Air India into a formidable privately held Indian airline, it is time to relook at its management team with a fresh perspective. This is probably why the search for the new CEO has been extended beyond internal talent,” said Virkar.

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Harshita Sharma

A financial news enthusiast and a keen observer of the stock market, I bring to you all the updates from the world of business and finance. So, check out my posts and stay tuned with the major (informational) happenings.

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