Debtladen Air India gets relief, GoM will decide modalities

The Union Cabinet on Wednesday formally approved the privatisation of national airline Air India Ltd and five of its subsidiaries.

Disclosing this, finance minister Arun Jaitley said at a press briefing that he would be heading a group to work out procedures for the disinvestment.

The move will not only embellish the credentials of the ruling National Democratic Alliance (NDA) as a reformist administration, but also ease the fiscal pressure on the Union government, especially in indirectly servicing the airline’s outstanding debt burden of ₹52,000 crore.

The group under Jaitley will decide on the treatment of unsustainable debt of Air India, hiving off certain assets to a shell company, spinning off and selling stakes in three profitmaking subsidiaries, the quantum of disinvestment, and the eligibility criteria for the bidders, the government said in a statement. This group will then report back to the Union Cabinet for final approvals. The constitution of the group will be done “quite fast”, Jaitley said without mentioning any timelines.

Air India was launched in 1932 by JRD Tata as Tata Airlines. Its name was changed to the current one in 1946. The government decided to take it over in 1953.

In 2000 too, also under a Bharatiya Janata Party (BJP)-led government, there was a move to privatise Air India but it went nowhere.

The airline has the largest domestic and long-haul fleet of 140 planes in the country and flies to nearly 41 international and 72 domestic destinations.

Apart from the planes, the airline also has vast land holdings, including nearly 32 acres in central Mumbai, besides its iconic headquarters on Marine Drive valued at more than Rs 1,600 crore.