Jun 29, 2017: The government, in one of its boldest reform moves, gave in-principle approval for “disinvestment” of debt-ridden Air India. Whether or not the airline will be fully privatized is not yet known. The final modalities, including the quantum of stake sale, would be decided by a group of ministers, finance minister Arun Jaitley said.
The national carrier has a total debt of around Rs 50,000 crore and an annual interest outgo of Rs 4,500 crore. It is surviving on a 2012 bailout package, under which it has so far received Rs 24,000 crore.
Some of the issues that the government will deliberate upon are how to tackle the unsustainable portion of Air India’s debt, eligibility criteria for bidders, hiving-off assets to a shell company, and disinvestment of the airline’s profit-making subsidiaries.
According to reports, the government could quit Air India by end-March 2018 and transfer it to a new private-sector owner. Besides resolving issues related to the airline’s debt, the government will also have to decide how much stake will be sold and the process of disinvestment.
Last month NITI Aayog had recommended complete divestment of Air India.