The government of India on Thursday took another step in the process for disinvestment of debt-laden state-run carrier Air India as it invited applications from investment bankers, law firms and other entities to advise on the strategic stake sale of the flag carrier.
The government has decided on strategic disinvestment of loss-making Air India by early 2018, which is guzzling up taxpayers’ money ridden with inefficiencies and mismanagement. The national carrier, under intense competition from more efficient and often-cheaper private airlines, is reeling under a debt of over Rs 52,000 crore.
The government wants experts’ advice to assist the disinvestment process. According to PTI, applications have been sought for engaging up to two advisers and a legal adviser for the “strategic disinvestment of Air India and its subsidiaries/ joint venture”.
The Union Cabinet and the Air India Board had approved to sell the carrier in June. Officials want the process to offload all or parts of the airline by early 2018. A ministerial panel is working on the modalities.
So far, IndiGo and Bird Group have expressed interest in buying various operations of the troubled national carrier. Conglomerate Tata Group, which is airline’s original founder and owner, has reportedly expressed its interest in buying a 51% equity stake in it. Bird Group, which provides various aviation services such as aircraft navigation, ground handling, customer management and logistics, is also keen to take up a stake in Air India. IndiGo had also reportedly approached the government for buying a stake in the beleaguered state-run behemoth.
Air India has about Rs 28,000 crore as working capital debt and about Rs 4,000 crore as interest burden alone. It has not turned profit in 10 years, since at least the year 2007. The carrier has received bailout packages worth about Rs 24,000 crore out of a total Rs 30,000 crore approved but has failed to revive its fortunes amid private airlines continuously gaining market share.