Union Minister of India Jayant Sinha told the Rajya Sabha last week that national carrier Air India has shown “considerable improvement” in operational and financial parameters in the recent past, as he asserted that the government remains committed to its disinvestment. The government's proposal to sell 76 per cent stake as well as transfer management control of the debt-laden airline to private players failed to take off in May. Sinha said transaction advisor EY had cited 24 per cent government stake and corresponding rights, and high amount of allocated debt as the reasons for not receiving any bids.
Other reasons cited by EY were “changes in macro environment, individuals not being allowed to bid, profitability track record, and bidders not being able to form a consortium within a given time period.” The stake sale plan did not attract any bidders when the deadline for submitting Expression of Interest (EoI) ended on May 31 and EY was the transaction advisor. In a written reply, Sinha said, “In view of volatile crude prices and adverse fluctuations in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in immediate near future. The issue would be revisited once global economic indicators, including oil prices and forex conditions stabilise.”
The Minister of State for Civil Aviation further said near and medium-term efforts would be initiated to improve Air India's performance. He also said the Air India Specific Alternative Mechanism (AISAM) would separately decide the contours of the mode of disposal of subsidiaries; Air India Engineering Services Ltd (AIESL), Air India Air Transport Services Ltd (AIATSL) and Airline Allied Services Ltd (AASL). Debt-laden Air India's losses after tax stood at £576.51 million in 2016-17.
