Govt to wait for stable oil, forex market to sell AI stake

The government on Wednesday said it would revisit the Air India disinvestment plan after oil prices, foreign exchange and other global economic indicators stabilise.

While asserting that the government remains committed to the disinvestment of Air India, Union minister Jayant Sinha told the Rajya Sabha that the national carrier has shown "considerable improvement" in operational and financial parameters in the recent past. The government's proposal to sell 76 per cent stake as well as transfer management control of the debt-laden airline to private players failed to take off in May.

Sinha said transaction advisor EY had cited 24 per cent government stake and corresponding rights, and high amount of allocated debt as the reasons for not receiving any bids.

Other probable reasons cited by EY were "changes in macro environment, individuals not being allowed to bid, profitability track record, and bidders not being able to form a consortium within a given time period", according to written replies provided by the minister. The stake sale plan did not attract any bidders when the deadline for submitting Expression of Interest (EoI) ended on May 31 and EY was the transaction advisor.

"In view of volatile crude prices and adverse fluctuations in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in immediate near future.

"The issue would be revisited once global economic indicators, including oil prices and forex conditions stabilise," Sinha said, adding near and medium term efforts would be initiated to improve Air India's performance. The Air India Specific Alternative Mechanism would separately decide the contours of the mode of disposal of subsidiaries -- Air India Engineering Services, Air India Air Transport Services and Airline Allied Services.