The Centre is planning to divest its stake in Air India by the end of 2018, and the winning bidder will be announced by the end of June, Minister of State for Civil Aviation Jayant Sinha said on Friday.
“We expect to have a winning bidder by the end of June and the legal closing of this transaction by end of this calendar year,” Sinha told CNBC-TV 18. The minister said that a group of ministers will decide if the government would maintain residual stake in the national carrier, and how much, if they opt for it.
The company, he added, would be sold as four different entities. The national carrier, its low-cost arm Air India Express, and subsidiary AISATS will be one entity, while Alliance Air – its regional arm –
will be another. Air India Air Transport Services Limited and Air India Engineering Services Limited would be sold separately, the minister said.
Bidders can attempt to buy the four entities separately, or in any combination, Sinha added. IndiGo and Vistara-Tata are the only airline companies to have shown interest, he told the news channel.
The information memorandum would be out in a couple of weeks, Sinha said. Asked about fixing responsibility for the dire financial condition of the airline, the minister replied that government agencies were working on investigating the people responsible for the losses that Air India has suffered.
Privatising Air India
The national carrier is surviving on taxpayers’ money, and the government has decided on a strategic divestment to cut these losses. At the end of 2016-’17, Air India’s total debt was Rs 48,876 crore. The company has not made any profit in 10 years. In 2017-’18, it is expected to report a loss of Rs 3,579 crore.
In May 2017, the Niti Aayog had also recommended that the airline be strategically divested. Arvind Panagariya, who was then the vice chairperson of the think tank, had said Air India’s debt was “simply not sustainable”.
On January 10, the Cabinet had relaxed the foreign direct investment rules for civil aviation by allowing foreign companies to invest up to 49%. However, these investments cannot exceed 49% directly or indirectly, and the ownership and control of the airline will remain with an Indian national.