Sell all A-I stake, al­low for­eign car­ri­ers to bid, says CAPA In­dia

Financial Chronicle - - PLAN, POLICY -

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.

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