Govt unlikely to divest entire stake in Air India

Girja Shankar Kaura

Tribune News Service

New Delhi, June 27

The BJP-led NDA government is unlikely to go for divesting its entire stake in the debt-ridden national carrier Air India and instead keep a majority stake with it while getting rid of the airlines’ debt.

According to reports, the Ministry of Civil Aviation was not keen on complete privatisation of the airline and scenario of the government retaining a 51% stake was more likely. The rest 49% could be sold to private players.

Although Civil Aviation Minister Ashok Gajapathy Raju has over and again clarified that all options were being considered to turn around the airline, which for the first time posted some profit last year, but reports suggested that among the options being considered were either reviving the airline by retiring the debt, going for privatisation, or reducing the airline’s debt by selling off the assets.

The reports also said the process for divesting the government’s stake in the state-run airline could be a long-drawn affair and it may not happen this fiscal.

A Cabinet note with various options has been circulated and only after getting views from various ministries involved a view would be taken by the Cabinet.

People in know of the developments said the matter of diluting the stake in Air India could in fact go to the Cabinet twice.

The Cabinet would first give an “in principle” approval for the sale of stake which would set the stage for starting the process of valuation of the airline, identifying the buyers and prospective suitors, decide upon the method of sale besides, hiring financial and legal advisers for the sale.

The reports also said the Prime Minister’s Office has insisted that no foreign investor be allowed to buy a stake in Air India. According to government regulations, domestic airlines can accept foreign direct investments of up to 49% from a foreign airline.

This has also sparked off speculation that the original floaters of Air India, the Tatas, have been showing interest in picking up the stake in the airline, but only after its debt considerably reduced or completely retired by the government.

Air India has a debt of Rs 52,000 crore, which includes Rs 20,000 crore of aircraft-related and Rs 32,000 crore of working capital debt.

National carrier under Rs 52,000-crore debt

• As per reports, the Ministry of Civil Aviation is keen on government retaining 51% stake in the national carrier and the rest 49% could be sold to private players
• Among the options being considered are either reviving the airline by retiring the debt, going for privatisation, or reducing the airline’s debt by selling off the assets
• Air India has a debt of Rs 52,000 crore, which includes Rs 20,000 crore of aircraft-related and Rs 32,000 crore of working capital debt