India is planning to sell a majority stake in Air India, the country’s national carrier, to a strategic partner in a bid to turn around the loss making airline, people with knowledge of the matter said.
India is planning to sell a majority stake in Air India, the country’s national carrier, to a strategic partner in a bid to turn around the loss making airline, people with knowledge of the matter said. The proposal includes reviving Air India within five years of selling a 51 percent stake, the people said, asking not to be identified as the information isn’t public. Talks are at an initial stage and presentations have been made to the finance ministry and the prime minister’s office, they added.
Air India spokesman Dhananjay Kumar and Finance Ministry spokesman D.S. Malik declined to comment.
Intense competition from non-state domestic airlines has added to the woes of the former monopoly carrier, which is saddled with about $7 billion in debt and has been unprofitable since 2007. Indian taxpayers have given Air India $3.6 billion in the past six years as part of an earlier bailout plan.
“It’s a welcome step but premature,” said Mark Martin, founder of Dubai-based Martin Consulting LLC. “The government should first set its house in order by amortizing and restructuring the debt before it tries to find someone who will buy 51 percent.”
India’s finance ministry wants the plan to be discussed in detail to avoid a situation where there are no buyers after the offer is announced, the people said.
The carrier’s share in the local market has shrunk to 14 percent from 35 percent a decade back, placing it third in the national ranking.