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The government wants to exit fully from Air India as it embarks on another effort aimed at divesting the loss-laden carrier after a plan to sell a 76% stake last year failed.
“I believe the government should not be in the business of running airlines… and believe the government should completely exit Air India,” aviation minister Hardeep Singh Puri said. “There are many who are very interested in the airline and the one who gets the airline will be very fortunate.”
Air India has debt of about Rs 31,000 crore after the government took over Rs 29,000 crore off its books, thus reducing the airline’s interest burden by Rs 2,400 crore to Rs 1,700 crore annually.
However, oil marketing companies last week stopped fuel supplies to the Air India Group at six airports because of dues of about Rs 5,000 crore, mainly affecting operations of the Alliance Air unit. The issue is expected to be resolved soon with the help of equity support from the government.
Puri said the so-called alternative mechanism, a panel headed by home minister Amit Shah, will meet soon to finalise the asset-sale plan. “The details are being finalised,” Puri said. “The committee headed by the cabinet secretary will look into it first and then the alternative mechanism will clear it.”
Last time around, the government sought to offload a 76% stake and retain the rest to be sold at a premium later, but there were no takers.
The government is more optimistic this time as the grounding of Jet Airways makes Air India a more attractive proposition for any entity seeking to take advantage of demand in the world’s second-most populous nation.
‘Improved Performance’
“We think it is the right time because the principal competitor of Air India – Jet Airways – has grounded operations, leaving the market mainly for Air India,” said a senior aviation ministry official.
India’s biggest carrier by passengers is IndiGo but it doesn’t fly longhaul routes.
Puri said there was no question of Air India’s privatisation plan not succeeding.
“Once you go down a route and encounter obstacles, there are lessons to be learnt,” he said. “We will analyse (the experience of last time). This time we will succeed. There is interest among buyers. We are getting so many calls from people interested in the national carrier. It would not be right for me to name them but there is a lot of interest.”
Air India chairman Ashwani Lohani said that the airline’s operational performance has improved significantly despite challenges.
AI will report a robust operating profit this fiscal,” he said. “In the first four months of this fiscal, our operating loss is down to Rs 170 crore (despite additional expenses of Rs 4 crore daily due to Pakistani airspace closure from February 27 to July 16) as opposed to an operating loss of Rs 802 crore in same period last fiscal.”
Big corporate houses such as the Tata Group, which did not bid for Air India last time, are keeping their options open.
“Let me put it this way. We are very happy where we are. We’ll see. We don’t want to say or commit on what’s in the future because we don’t know,” Tata Sons chairman N Chandrasekaran told ET in a recent interview. The Tata Group, apart from having founded Air India before it was nationalised, has stakes in Vistara and AirAsia India.
Qatar Airways group CEO Akbar Al Baker had said after the Air India divestment failed last year that he would be open to buying the national carrier and that the debt of the airline was not worrisome. But he would not want its units such as ground handling and engineering, which the government plans to sell separately.
“I believe the government should not be in the business of running airlines… and believe the government should completely exit Air India,” aviation minister Hardeep Singh Puri said. “There are many who are very interested in the airline and the one who gets the airline will be very fortunate.”
Air India has debt of about Rs 31,000 crore after the government took over Rs 29,000 crore off its books, thus reducing the airline’s interest burden by Rs 2,400 crore to Rs 1,700 crore annually.
However, oil marketing companies last week stopped fuel supplies to the Air India Group at six airports because of dues of about Rs 5,000 crore, mainly affecting operations of the Alliance Air unit. The issue is expected to be resolved soon with the help of equity support from the government.
Puri said the so-called alternative mechanism, a panel headed by home minister Amit Shah, will meet soon to finalise the asset-sale plan. “The details are being finalised,” Puri said. “The committee headed by the cabinet secretary will look into it first and then the alternative mechanism will clear it.”
Last time around, the government sought to offload a 76% stake and retain the rest to be sold at a premium later, but there were no takers.
The government is more optimistic this time as the grounding of Jet Airways makes Air India a more attractive proposition for any entity seeking to take advantage of demand in the world’s second-most populous nation.
‘Improved Performance’
“We think it is the right time because the principal competitor of Air India – Jet Airways – has grounded operations, leaving the market mainly for Air India,” said a senior aviation ministry official.
India’s biggest carrier by passengers is IndiGo but it doesn’t fly longhaul routes.
Puri said there was no question of Air India’s privatisation plan not succeeding.
“Once you go down a route and encounter obstacles, there are lessons to be learnt,” he said. “We will analyse (the experience of last time). This time we will succeed. There is interest among buyers. We are getting so many calls from people interested in the national carrier. It would not be right for me to name them but there is a lot of interest.”
Air India chairman Ashwani Lohani said that the airline’s operational performance has improved significantly despite challenges.
AI will report a robust operating profit this fiscal,” he said. “In the first four months of this fiscal, our operating loss is down to Rs 170 crore (despite additional expenses of Rs 4 crore daily due to Pakistani airspace closure from February 27 to July 16) as opposed to an operating loss of Rs 802 crore in same period last fiscal.”
Big corporate houses such as the Tata Group, which did not bid for Air India last time, are keeping their options open.
“Let me put it this way. We are very happy where we are. We’ll see. We don’t want to say or commit on what’s in the future because we don’t know,” Tata Sons chairman N Chandrasekaran told ET in a recent interview. The Tata Group, apart from having founded Air India before it was nationalised, has stakes in Vistara and AirAsia India.
Qatar Airways group CEO Akbar Al Baker had said after the Air India divestment failed last year that he would be open to buying the national carrier and that the debt of the airline was not worrisome. But he would not want its units such as ground handling and engineering, which the government plans to sell separately.
