Air India divestment to be at one go, not piecemeal

When national carrier Air India is privatised, it will be at one go and not through gradual stake sale – this is the view that has emerged strongest in the Narendra Modi government on the future of the struggling airline, according to a report today.

Citing sources, Business Standard says that in a single stroke, the government will cede control by either reducing its stake to below 49 per cent or exiting the national carrier completely.

''No investor, domestic or foreign, will be interested in buying a minority stake in Air India. There won't be a 10-, 15-, 20-per cent stake sale. It has to be privatisation at one go. The decision to be taken is whether the government will bring down its ownership to below 49 per cent or exit altogether,'' said a senior government official, according to the paper.

The official said that a number of departments in the government, including the Prime Minister's Office, civil aviation ministry, and finance ministry, are considering various options regarding the national carrier, which is laden with a debt of Rs46,570 crore.

A number of informal discussions have taken place on this. The consensus view is that there is no sense in the Centre divesting stake and retaining ownership. The final decision would be taken by the Cabinet in the next couple of months.

It is clear that before any attempt to privatise is made, the debt will have to be dealt with. To that end, Air India is looking to sell some of its real estate assets, the report says. And public-sector banks will soon start a fresh round of discussions with the airline to recast part of the debt.

The official said that the privatisation process was not contingent upon the discussions around debt. ''Talks on retiring or recasting debt can and will take place alongside any discussion on privatisation. It is not that we wait for the debt burden to lighten and then start the divestment process,'' the official said. This will ensure a time-bound process that will not stretch over multiple quarters.

However, the official said that it was too early to comment on whether Air India would count in the ambitious disinvestment target of Rs72,500 crore for 2017-18. If the decision is to sell, the government is confident that a good suitor can be found.

''Air India is on a strong footing operationally. It has a great value in terms of fleet and international routes. Its flight crews and other staff have more experience than domestic competitors,'' the person said.