Air India to be divested by year-end: Jayant Sinha

The central government plans to divest its stake in the national passenger carrier Air India by this year-end, said Minister of State for Civil Aviation Jayant Sinha on Friday.

He said the bidding process is expected to be finished by June, by when the winning bidder will be chosen, and all the "legal formalities" will be completed by December.

As per the plan, Air India group will be divested as four different entities and that the "information memorandum" will be issued in sometime.

Accordingly, one of the four entities will include Air India, its budget subsidiary Air India Express and gateway services and food solutions units AI-SATS.

In addition, Air India Air Transport Services, Air India Engineering Services and Alliance Air will each form separate entities.

A day after the Union Budget for 2018-19 was presented, Sinha said: "Information Memorandum will be out soon... We plan to decide on the winning bidder by June and the legal formalities will be concluded by December this year."

In his Budget speech on Thursday, Finance Minister Arun Jaitley said: "The government has also initiated the process of strategic disinvestment in 24 Central Public Sector Enterprises. This includes strategic privatisation of Air India."

In terms of the other key issue regarding the exact debt level of the airline and the ways to deal with it, Sinha said that it is being looked at by a ministerial group -- Air India-specific Alternative Mechanism -- headed by Jaitley.

Apart from modalities surrounding the divestment process, the ministerial group has been mandated to decide on key issues such as treatment of Air India's debt and hiving-off of its assets.

The airline is under a massive debt burden of around Rs 50,000 crore (around $8 billion). The national carrier got a new lease of life in April 2012, when the then UPA government approved a Rs 30,000 crore turnaround and financial restructuring package spanning up to 2021.

In 2018-19, budgetary support of Rs 650 crore has been provided to the national carrier on account of its turnaround and financial restructuring plan.

The airline has also been allowed to raise Rs 506 crore through IEBR (Internal and Extra Budgetary Resources).

Further, Sinha said that the a foreign airline has formally shown interest in Air India, but did not disclose its identity.

The developement assumes significance as on January 10, the union Cabinet had decided to open up the national carrier for foreign direct investment (FDI) up to 49 per cent under the approval route.

Till now budget passenger carrier IndiGo has evinced interest in buying the airline's international operations and its subsidiary Air India Express.

Besides IndiGo, aviation industry majors SATS, Bird Group and Celebi have shown interest but in buying Air India's ground handling unit.

On the Budget announcement of a NABH (NextGen Airports for Bharat) Nirman scheme, Sinha said that a "detailed study" would be carried out to create adequate airport capacity keeping in view the growing traffic scenario over a period of next 15 to 20 years.

In the Budget speech Jaitley announced: "Airport Authority of India (AAI) has 124 airports. We propose to expand our airport capacity more than five times to handle a billion trips a year under a new initiative - NABH Nirman."

"Balance sheet of AAI shall be leveraged to raise more resources for funding this expansion."

--IANS

rv/vd


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel