Maharaja On Sale
Business Today|July 02, 2017

Selling a loss-making, debt-ridden carrier like Air India is no easy task, but the government hopes to be third time lucky.

Manu Kaushik
Maharaja On Sale

Will the beleaguered state-run Air India soon get a new lifeline? In a recent interview, Finance Minister Arun Jaitley said that the disinvestment of the loss-making national carrier is on the cards. According to him, private carriers, which already have 86-87 per cent market share, could also handle 100 per cent flying. On the other hand, while Air India’s market share is just around 14 per cent, its debt burden has piled up to reach ₹50,000 crore. Of the total debt, ₹20,000-25,000 crore is related to aircraft valuation. As for settling the remaining amount, Air India has some lucrative assets, the Minister noted.

Following Jaitley’s comments, the National Institution for Transforming India (NITI) Aayog, the government think tank, also rooted for its disinvestment. But a few days later, Civil Aviation Minister P. Ashok Gajapathi Raju admitted that finding a scapegoat – in the form of a strategic investor – might not be easy. Even as the government machinery is pulling out all the stops to find a suitor, the sell-off could be tricky.

Who May Buy Air India and Why

As the airline is wholly owned by the Indian government, any investor – corporate or institutional – could only be interested in buying at least 51 per cent stake to thwart the chances of the government’s interference in the future. Given that the carrier works like a private air charter service for ministers and several bureaucrats, to say nothing of the management apathy, no investor would ever want the old order to interfere with the airline’s future course.

This story is from the July 02, 2017 edition of Business Today.

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This story is from the July 02, 2017 edition of Business Today.

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