Air India finally has a chance to lose the baggage

30 March, 2018, 00:23 | Author: Inez Murphy
  • Government wants to sell 76% stake in loss-making Air India transfer management control

National carrier Air India would now become a "majestic Maharaja" from the "beggar" it had become during the UPA regime, Union minister Jayant Sinha said here today.

The civil aviation ministry has sought Expression of Interest (EoI) for the stake sale in Air India and two of its subsidiaries.

Air India serves 54 domestic and 39 global destinations and has been loss-making for many years.

The Central government on Wednesday revealed that it would be selling 76 per cent stake in debt-ridden national carrier Air India through an auction process. "The balance debt shall be allocated to Air India Asset Holding which is 100% owned by the Government of India subject to receipt of requisite approvals from lenders and regulators, as applicable".

In Air India, the case for outright privatisation flows precisely from its inability to withstand sectoral competition.

Bids by management and employees of companies participating directly or by forming a consortium would be considered subject to guidelines issued by the Department of Investment and Public Asset Management (DIPAM).

Indigo operates primarily on domestic routes has about a 40 percent market share compared with a domestic market share by Air India and subsidiary Air India Express of 12.3 percent.

According to reports, the Indian private carriers could join hands with foreign counterparts to bid for the debt-ridden Air India.

Companies including low-priced Indian carrier IndiGo, owned by InterGlobe Aviation, Tata Group and Turkey's Celebi Aviation Holdings, have expressed an interest in buying some of Air India's operations. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.

The 24% stake that the government retains is their attempt to be prepared to cash in on any future improvement in the fortunes of Air India.

Despite this enormous task of turning around an airline which has accumulated losses of Rs 27,231 crore between 2012-13 and 2016-17, and even in 2016-17 posted a loss of Rs 5,765 crore on revenues of Rs 22,177 crore, there will be many that will be interested.

Given the salt-to-software conglomerate's desperation to be India's No. 1 steelmaker-it seems to have overpaid for bankrupt mills- it's unclear Tata would want to take on another big deal so soon.



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