Saturday, 21 July, 2018

For Air India Disinvestment, Cabinet Gives In-Principle Approval

Jayant Sinha Air India disinvestment process Bharatiya Janata Party BJP leader Subramanian Swamy For Air India Disinvestment, Cabinet Gives In-Principle Approval
Nellie Chapman | 29 June, 2017, 09:07

"The Indian Cabinet has given its in-principle approval for Air India's disinvestment", Finance Minister Arun Jaitley said in the national capital.

A group will be set up to finalise the modalities/details of disinvestment of Air India, including the quantum of stake sale, he said. Air India's market share was around 14 percent while the debt is Rs 50,000 crore while the government has not put in money in private carriers, Jaitley said at Dialogue@DDNews programme.

Some officials in the civil aviation ministry have said it would be better to dispose of the airline's subsidiaries and property holdings initially to lower the debt burden and ensure taxpayers benefited if the airline's performance improved.

The airline, which was afloat thanks to a Rs 30,231 crore nine-year bailout programme approved in 2012, has about Rs 52,000 crore of debt.

Earlier, Niti Aayog headed by Prime Minister Narendra Modi submitted a report recommending a stake sale in the airline.

Air India Express' remaining profitable assumes significance amid the government looking at various options, including possible privatisation, to revive debt-laden Air India. "If 86 per cent of the aviation market can be handled by private sector, then 100 per cent can also be handled by the private sector", Jaitley had said. It has not turned profit in 10 years, since at least the year 2007.

There was all-round cheer when Air India had reported a modest operating profit for 2015-16, for the first time since the two erstwhile airlines were merged to form the present entity.

In January, Air India held a 12.8 per cent market share behind low-priced carriers SpiceJet and market leader IndiGo, which dominates with a 42-per cent chunk of the business.

Air India is still a large player on worldwide routes and it has gradually improved its operational performance in recent years.