The Indian government is all set to wrap up the disinvestment in state-run carrier Air India before end of the year. The Union Cabinet has given an in-principle approval for strategic disinvestment in Air India in June. A panel of ministers headed by Finance Minister Arun Jaitley is currently devising the strategy to execute the sale.
A government source said, “We will complete the process before the year-end. There is no choice but to privatise it.” The source said that the preference so far is on a “domestic buyer”. Several foreign companies, including airlines have informally expressed interest in buying Air India. The source also said that 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 appointed panel will deal with the “unsustainable debt”, hiving off of certain assets to a shell company, de-merger and strategic disinvestment of three profit-making subsidiaries, the quantum of disinvestment and the “universe of bidders”.
It was only after government think tank NITI Aayog recommended a 100 per cent stake sale, along with writing off its debt, that disinvestment of the Maharaja took pace. NITI Aayog had also detailed a road map for Air India's stake sale, including writing off loans to the tune of £3 billion. AI is currently under a debt of around £6 billion, including £2.1 billion of aircraft-related loan and around £800 million working capital loan.
