Government is open to listing ailing state carrier Air India, after failing to attract buyers for a 76 per cent stake in the company. While the government is considering several proposals related to reviving the divestment process, it will not allow complete foreign ownership of the airline, a source said.
One of the proposals would involve the government retaining a share in the debt-laden carrier and selling it at a later date so it can capitalise on any financial upside that may occur from listing the airline, the source said.
The government may also consider reducing the debt it passes on to potential buyers and restructuring the large workforce, another senior government official said in a statement.
“We will take a decision in next few days on changing conditions before inviting fresh bids,” the official said, adding that the government is committed to selling its stake in the national carrier in the current financial year but could defer it if it fails to get the right price.
The government in March finalised plans to divest a majority stake in Air India and offload about $5.1 billion of its debt, but prospective buyers stayed away, with some citing onerous terms as a reason for their lack of interest.
Air India, known for its Maharaja mascot, has some of India’s most lucrative international and domestic landing and parking slots that are key for airlines.
The terms had also stipulated that the government would have continued to hold a 24 per cent stake, with the need for the bidder to abide by conditions, not yet detailed, designed to safeguard employee interests.
The government will soon arrange a bank loan for Air India, the second official said, to meet working capital needs and buy time for a few months before inviting fresh bids.
“The heavens would not fall if the stake sale is deferred to the next fiscal year,” the official said adding that ahead of national elections next year, the government could not take the risk of selling the national carrier at a low price.
This could cost the government politically and hurt the process of further privatisation of other state companies, he said.
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