Govt to go ahead with Air India stake sale
09 January 2018
The government will push ahead with the sale of stake in Air India that is now a permanent drain on the state exchequer and save crores of rupees in taxpayer money rather than offer another package that will only deepen its debt.
The announcement comes days after a parliamentary panel advised the government to give five more years to bleeding Air India try another revival plan.
The union cabinet gave an in-principle approval for divestment of government's stake in Air India in June last year. A few airlines, including Tata Group, which runs two JV airlines in India, IndiGo and Jet Airways have shown interest in acquiring the national carrier, although in parts.
Some foreign airlines have also informally expressed interest in acquiring the airline that still owns a large fleet of aircraft and goodwill.
A panel of ministers headed by finance minister Arun Jaitley is now devising the strategy for executing the sale.
"Transaction advisers have been appointed. We will complete the process by June," said an official, who did not wish to be identified. The government hopes to wrap up the transaction by June, the official added.
The parliamentary standing committee on transport, tourism and culture has concluded that the government should review its decision to privatise or divest stake in Air India and explore the possibility of "an alternative to disinvestment of our national carrier which is our national pride."
The move for sale of stake in Air India gathered pace after the NITI Aayog recommended the sale of 100-per cent stake and writing off of the loss-making airline's debt.
While PM Narendra Modi is keen to ensure a divestment of the loss-making airline, there are several lawmakers who enjoy the benefits of free travel by Air India and want the carrier to remain in service, so that it continues to provide free services to elected representatives.
Meanwhile, the Centre for Asia Pacific Aviation on Monday said that postponing divestment of the state-run airline would only lead to further erosion in its valuation.
"Parliamentary panel recommending divestment of Air India be postponed by 5 years will further erode its value. CAPA estimates that the government would need to inject additional $2.5-3 billion funding, and these may be conservative estimates," CAPA chief executive Kapil Kaul said.
CAPA chief was responding to panel's suggestion that asked the government to revisit its decision to privatise Air India at the end of the 10-year turnaround plan in 2022.
The CAPA further said that the process of Air India's privatisation should be 'fast- tracked' to maximise investor interest and value for the government.