Air India sale process to be completed before year-end
The government plans to wrap up the disinvestment in state-run carrier Air India before end of the year and the preference is veering towards a “domestic buyer” for the debt-laden airline.
The Union Cabinet gave an in-principle approval for strategic disinvestment in Air India in June and a panel of ministers headed by finance minister Arun Jaitley is now devising the strategy for executing the sale.
“We will complete the process before the year-end. There is no choice but to privatise it,” a government source told TOI.While no final decision has been taken, the source said the preference so far is for a “domestic buyer.” Some foreign companies including airlines have informally expressed interest in buying Air India.
Disinvestment of Air India gathered pace after the government’s think tank NITI Aayog recommended up to 100% stake sale, along with writing off its debt. Experts say it would be a difficult task to undertake a stake sale in the airline in the run up to 2019 general elections.
The source said the panel is discussing several options to deal with the large debt of the airline as no buyer is expected to come forward to take over such a liability. He said options being discussed include a partial write-off of the debt.
The panel has been tasked on how to deal with the “unsustainable debt”, hiving off of certain assets to a shell company , de-merger and strategic disinvestment of three profitmaking subsidiaries, the quantum of disinvestment and the “universe of bidders.”
The NITI Aayog in its recommendations had detailed a road map for Air India’s stake sale, which includes writing off loans to the tune of Rs 30,000 crore. AI has debt of around Rs 60,000 crore, which includes around Rs 21,000 crore of aircraft-related loan and around Rs 8,000 crore working capital loan, according to estimates.