January 12, 2018 TnH Global

Air India to be sold out by the end of 2018, says Civil Aviation Minister

Minister of State for Civil Aviation Jayant Sinha laid out a timeline for the strategic disinvestment of state-run carrier, Air India.

“We have said over and over again that from now we expect it to take another six to eight months for the winning bidder to be announced. And thereafter, it will take another few months for the legal closing and the transfer of assets to actually happen,” said Sinha in a conversation with Moneycontrol.

The minister also elaborated that so far, Interglobe Aviation, which runs IndiGo Airlines, is the only airline company to have officially expressed its intent to buy the national carrier. Air India made a loss of Rs 4,310.65 crore in 2015-16, adding to its Rs 6,280.42 crore loss in the previous financial year. The airline, which is completely owned by the government, is weighed down by a debt of around Rs 52,000 crore.

On whether the government has reached a conclusion as to how much of the debt will be absorbed by them, Sinha explained, “those are decisions that will be made by the audited mechanism under the advice from the transaction adviser which is EY (a consultancy firm).

Officials in the ministry of civil aviation have confirmed that the government is not looking to fully privatise the mass carrier. The Centre shall likely hold 26 percent of Air India. NITI Aayog on the other hand had recommended a 100 percent stake sale. A final call, however, would be taken by the group of ministers looking into the process.

The official elaborated that the government was contemplating keeping a minority stake, but insisted that it would like to give full independence to the new owner in running the airline. The Union Cabinet chaired by the Prime Minister on Wednesday had approved foreign direct investment of 49 percent in Air India. This meant that foreign players could not hold more than 49% of the total stakes in the national carrier.

Explaining the process, Sinha said, “Suppose the government were to disinvest 60 percent of Air India. If we have disinvested 60 percent of Air India, 60 percent would be with the private sector, 40 percent would remain with the government. Now we have said that no more than 49 percent could be in foreign hands. So 49 percent of the 60 percent, for instance, could be with the foreign player, then 11 percent could stay with an Indian player and 40 percent could stay with the government. So the 51 percent would be met.”

News Source: http://www.news18.com/ & Moneycontrol