Air India may be sold in parts to fast-track divestment

The government is looking at the option of selling state-owned Air India in parts to make it attractive to potential buyers amidst reports that private airline IndiGo has made a formal enquiry for the overseas business of the national flag carrier.

While reports have been pointing to the possibility of Air India going back to its original founders, Tata Group, the first remains that there were no takers for the debt-laden carrier except the ''interest'' shown by low-cost carrier IndiGo in Air India's overseas business.

Air India is saddled with a debt burden of $8.5 billion after the government injected $3.6 billion since 2012 to bail out the airline.

IndiGo, a low-cost, no-frills operator, cannot hope to run Air India in the `Maharaja' style it operates in. And, there are few who want to nurse a dying airline back to health without knowing fully well where the malice lies.

This is exactly why the government is looking to sell the loss-making `Maharaja' in parts among likely bidders.

In a notice to the BSE, IndiGo's president Aditya Ghosh on Wednesday said he has written to the civil aviation ministry expressing interest in buying the airline.

After sinking huge sums into a mismanaged and over-exploited national carrier by successive governments, Prime Minister Narendra Modi's cabinet finally gave the go-ahead last month for initiating sale process of the airline.

Air India, once the nation's largest carrier and only airline, saw its market share slump to 13 per cent despite buoyancy in air travel even as private carriers such as InterGlobe Aviation's IndiGo and Jet Airways have grown in size and market share.

The government is reported to have set a deadline of early next year to get the sale process underway, although opinion is still divided on whether the government should retain a stake or exit completely.

Also, at its present valuation, the government cannot hope to gain much. Except for its brand value, Air India has little asset value and a part sale would risk the government holding on to unprofitable businesses left over after the sale.

Air India has six subsidiaries – three of which are loss-making – with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.

Earlier this month, about $30 million worth of art, including paintings by artist M. F. Husain, went missing from its Mumbai offices, chairman Ashwani Lohani said.

"The exercise is complex and there is no easy way out," said Jitendra Bhargava, operational head of Air India in 1997-2010. "At this juncture, selling even part of Air India is far from certain."

Besides problems associated with the structure and financial difficulties, Air India has about 40,000 employees and a 2,500-strong labour union.

A committee comprising five cabinet ministers, led by finance minister Arun Jaitley is expected to meet this month and begin ironing out the finer details of the plan.