Air India privatisation: Top government official denies news of 51% stake sale plan

By: | Updated: February 28, 2017 2:27 PM

Indian government sought to nip in the bud the news about it planning to sell a majority stake in the state-run carrier Air India, with the Civil Aviation Secretary telling TV news channels that there is no such proposal and the government is not planning to sell any stake in the PSU giant.

Air India, under intense competition from leaner, more efficient and often-cheaper private airlines, is reeling with a debt of about Rs 50,000 crore, with about Rs 28,000 crore in working capital debt, and has not turned profit since at least the year 2007. (Image: PTI)

Indian government sought to nip in the bud the news about it planning to sell a majority stake in the state-run carrier Air India, with the Civil Aviation Secretary telling TV news channels that there is no such proposal and the government is not planning to sell any stake in the PSU giant.

India’s Civil Aviation Secretary is Rajiv Nayan Choubey.

Earlier Tuesday morning, a Bloomberg news report had said that India is planning to sell 51% equity stake in Air India, the country’s national carrier, to a strategic partner in an effort to turn around the loss-making airline. The news report had cited unidentified sources.

Bloomberg had also said that a proposal to the effect, also presented to the Ministry of Finance and the Prime Minister’s Office, also included a plan to revive Air India within five years of selling the stake.

However, CNBC TV18 and ET Now later cited the Aviation Secretary denying it.

Air India, under intense competition from leaner, more efficient and often-cheaper private airlines, is reeling with a debt of about Rs 50,000 crore, with about Rs 28,000 crore in working capital debt, and has not turned profit since at least the year 2007. The carrier has received bailout packages worth about Rs 23,000 crore out of a total Rs 30,000 crore approved, but has failed to revive its fortunes amid private airlines continuously gaining market share.

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Air India’s market share in domestic market has fallen to 14% in 10 years from 35% a decade ago, placing it third in the national ranking, Bloomberg said. Air India also flies overseas, and commands 17% of the international traffic from and into India.

However, Air India’s loss in the financial year 2015-16 narrowed to Rs 3,587 crore from Rs 5,859 crore in the previous year.

In the recent past, there have been several other news of the government considering selling stakes in Air India through various means, including an IPO, but the government has always come back denying any such considerations. It has maintained that the priority is to tackle Air India’s large debt on a sustainable basis.

 

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