Recently the Cabinet gave in-principle approval to sell Air India. It is an oft-repeated idea, but this time the resolve seems to be stronger. Government will really be doing our country a huge favour if it gets rid of this company, which is a giant black hole relentlessly sucking in taxpayer money.

As an ex-distressed banker, i can say this: some companies can be rescued from the hole they have dug themselves in. Others have dug it so deep, they can never, ever get out. Air India is in the latter category. There is no point saying, “But last time i flew, the service was good.” It’s irrelevant. The hard truth is this: the company is a dud. Sorry.

Here’s the math, as an example. Imagine your neighbour has a drinking problem because of which he racks up loans of over Rs 5 crore. But instead of earning money and paying back the loans, he continues to borrow even more and spends another Rs 70 lakh a year on his addiction. Over the decades you have rescued him several times. However, he refuses to change. Now the loans are too big. Even if he did try his best, he can’t make more than a couple of lakhs a year. Hence he can never repay his debts.

To understand Air India, multiply the numbers in the example above by 10,000. It has over Rs 50,000 crore of debt and is cashflow negative, reportedly by over Rs 7,000 crore a year – the numbers could be worse, as the company hasn’t released recent data and CAG has raised issues even about the data it has released.

Even in the best of scenarios, Air India can’t earn enough to repay its debt. So no new buyer can buy it as-is, with its mountain of debt. For there is no scope to repay it. Financially, right now Air India is the worst corporate in the country.

There’s no point in casting blame. When sins have been done over decades, no one person or set of persons is to blame. One does feel bad for the 20,000 plus employees, who may even be working hard at running the company day to day.

But the black hole is going to remain just that, and the taxpayer is paying for it. Air India’s annual cashflow loss is equal to what Vijay Mallya’s Kingfisher owes banks. Air India costs us one Mallya a year, money that can be used to build hundreds of hospitals and schools.

Many lame arguments are given to not sell Air India. These include arguing that it is the flag carrier. Well, many countries no longer have flag carriers (including America). In other cases they don’t cost government so much. Flag carrier pride for a passenger airline is stupid. Air India is not the Indian Air Force.

Air India’s role in rescue efforts is also tom-tommed. Well, it beats all logic to keep such an expensive operation on standby for occasional rescues. It’s better the Centre gives money to private airlines in an emergency. Do we really think if there is a rare, genuine calamity, and government wants to pay to hire a plane, IndiGo and SpiceJet are going to refuse? And isn’t this far more efficient than burning Rs 7,000 crore a year?

These two noble arguments to keep Air India alive as-is hide the real reason. It is the neta’s and babu’s club in the sky. Politicians and bureaucrats, along with their families, friends and neighbours, all abuse Air India to get free upgrades and slavish service from the staff. Getting Air India off the government’s hands will end these VVIP joys.

Even if we want to pamper netas and babus, there are cheaper ways. Paying them money to fly business, or even first class, in private airlines will be cheaper than keeping the Air India monster alive. Government can buy upgrade vouchers for its senior functionaries.

So how does one sell Air India? Its assets, office infrastructure, running operation and landing rights have some value – though well below its debt. Government should give it to the highest bidder amongst various private players. Of course the bid is unlikely to pay off the entire debt, so the winning bidder will probably be someone who wants the least discount on the loan.

Employees may be retained or retrenched, something the new buyer will decide. But a decent retrenchment package (say three years’ salary) for the entire staff would cost around Rs 9,000 crore (given a salary bill of Rs 3,000 crore a year). The new buyers will take that into account in their bid.

Even in the best case, government will have to give a discount on the loan. It may even have to give the company to the new buyer for one rupee. The process will not make government any money. But it will get rid of a part of the loan and all of the cash burning enterprise. To that extent, this entire exercise is not so much a sale of Air India as good riddance. This is something we need to understand going into the sale, so we don’t have unrealistic expectations from it.

Beware opposing voices that will complain after the sale, “We sold Air India for nothing.” Tell them, we didn’t sell it, we got rid of it, and that has saved us a lot of money every year.

Let’s all keep up the pressure to ensure that the Modi government sells Air India. We will be doing the country’s finances a big favour.