Meet the woman who wants to pilot Air India (and the pilots opposing her)5 min read . Updated: 29 Dec 2020, 09:52 AM IST
- Mallik joined Indian Airlines as a management trainee in 1989 in Kolkata. She studied in Odisha and holds a BSc (Hons.) degree in physics and an MBA from Utkal University. She played a key role in Air India’s Vande Bharat mission
MUMBAI: In the long-running saga of Air India privatisation, an unlikely figure has emerged with an ambition to pilot the carrier.
Meenakshi Mallik, who serves on the flag carrier’s board as director (commercial) and has worked at the airline for 31 years, is the face behind the employees' bid to acquire Air India. She and 218 other employees have placed an expression of interest (EoI) for the airline, responding to the Preliminary Information Memorandum (PIM) issued by the government.
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While she seemed confident in a communication to the employees who have signed up to be a part of the consortium, the plan is facing staunch opposition from the company’s pilots, who view the management with suspicion.
Separately, the Tata Group and a US-based fund named Interups--run by executives of Indian origin--have also submitted EoIs. Early in January, the Centre will announce the qualified bidders. The battle for the airline will play out subsequently.
Rise through the ranks
Mallik joined Indian Airlines as a management trainee in 1989 in Kolkata. She studied in Odisha and holds a BSc (Hons) degree in physics and an MBA from Utkal University. Her father Upendranath Malik was a 1961-batch IAS officer, who served in senior positions in the Odisha government. Her mother Rajkumari Malik was a doctor.
Most recently, she played a key role in Air India’s Vande Bharat mission.
But how does Mallik plan to acquire a mammoth airline saddled with staggering debt with a ragtag band of colleagues?
The answer has two parts. One is to partner with a private equity fund that will finance the bid while letting employees retain control of the airline. Second is that the support of the employees will be the biggest political hurdle in the privatisation bid. Partly due to this, the government has built in adequate provisions into the PIM to allow an employees-led consortium to take control of the airline. A consortium that enjoys the support of the employees is likelier to be able to effectively take control and successfully helm the flag carrier.
In a recent letter to the members of her group, Malik had spelt out the plan: “Due to the support we will receive from the financial partner, while I anticipate that each of us will have to make a contribution of no more than ₹1,00,000 ( ₹1 lakh), to bid for the company, this is a detail which I will be better placed to convey to you all once we have passed the initial stage of the EoI."
Mint has reviewed a copy of the letter, in which she praises the group’s collective effort and vision which has enabled them to consider a bid for “our Palace in the Sky".
Responding to questions from Mint, Mallik said the employees' bid was separate from those of Interups Inc and the Tata Group. She did not respond to other questions and declined to be interviewed.
Interups, which has submitted an expression of interest (EoI) for Air India, is, however, interested in tying up with the airline’s employee consortium, Laxmi Prasad, the company’s chairman told Mint. The company is ready to offer 51% of the airline stake to the employees' consortium, provided it wins the bid, he said, in response to messages seeking comment.
"Willing and continuing employees will be offered 51% in the consortium that acquires the airline. No capital investment is required," Prasad said.
But little is known about Interups, a fund that principally manages the wealth and retirement corpus of high-networth, non-resident Indians.
Mallik’s plan has not seen the smoothest of start, though. For one, not many employees have joined the consortium, although it’s unclear if the group has been kept small by design for initial stages.
"Only a small number of employees (219 in this case) came out to place a bid as probably it didn’t make sense for others to join the consortium," a senior official at the airline said, speaking on the condition of anonymity, pointing out that the national carrier has close to 10,000 permanent employees on its rolls.
Malik’s bid has also faced opposition from the two big pilot unions of the airline--Indian Commercial Pilots’ Association (ICPA) and Indian Pilots’ Guild-- (IPG), both of whom have asked its members to not take part in the bid.
"Most of the members of the bidding consortium are not directly involved with operations of the airline. Also, pilot bodies like ICPA and IPG are seeking reversal of huge pay cuts and immediate payment of arrears from management. Considering many in the bidding consortium are part of the management, and have taken a namesake pay cut of 10% or so, as compared to 50-70% pay cut for pilots, and have done nothing for the pilots, we have asked pilot union members to stay away from bidding," said a senior pilot with the airline, who requested anonymity.
A banker, who also spoke on the condition of anonymity, said the challenge with an employee consortium acquiring the airline was not just the capital but also the management bandwidth. “I believe that even if they are able to arrange capital, these consortia lack management bandwidth. It is no mean feat to run an airline as not only does it need deep pockets but also a lot of experience in managing something as big in an industry that is volatile," said a senior banker at a large public sector bank.
While there is no dearth of naysayers, if Mallik is able to drum up support of a significant number of employees, she could emerge as a key figure in forming a viable consortium.
As things stand, there is little clarity about the shape the final bid will take, as the government is yet to spell out the exact contours of the airline’s debt restructuring. Air India’s net debt as on March 2019 stood at a whopping ₹58,255 crore, of which ₹29,464 crore has been moved into a special purpose vehicle, or a company created for a specific purpose—in this case, the asset restructuring of the airline.