Sell all A-I stake, allow foreign carriers to bid, says CAPA India
THE government should sell its entire stake in Air India as any level of equity retention would raise concerns about the prospect of government interference after privatisation, said a report on Wednesday.
Foreign airlines, the aviation think-tank CAPA India said, should be allowed to bid for the stake in the lossmaking national carrier. In a brief report, it said cleaning up A-I’s balance sheet would be the most important step.
To revive A-I, which has been in the red for long, the government has decided to go for its strategic disinvestment and the modalities are being worked out by a group of ministers. The national carrier has a debt burden of more than Rs 50,000 crore.
“The government should exit Air India completely. Any level of equity retention will deter investors due to concerns about the prospect of continued government interference after privatisation,” CAPA India said.
According to the report, the core divestment should consist of the airline operations only – Air India, Air India Express and optionally Air India regional. These operations should be sold along with aircraft- related debt and reasonable working capital loans, it added.
Noting that foreign airlines should be allowed to participate in the disinvestment process, the report said that would increase the number of interested bidders and the valuation.
“The domestic and international operations should be offered in one line, as there is significant value in the feed, which they provide to each other. Air India is also part of a global system as a result of its membership of Star Alliance. Separation of domestic and international operations will result in reduced interest,” it said.