Options for disinvestment of AI
The government of India is looking at three options for Air India’s disinvestment, including holding up to 49% in the national carrier, even as it is almost certain to take over a large part of the debt burden to make the airline more attractive for buyers. Sources said that while there has been a recommendation to completely exit the perpetually loss-making airline, another possible route to follow is “the Maruti model,” where the government handed over majority control to Suzuki, for which it received a premium. Later the government reduced its stake further through a public issue. A portion of government shares were also sold to Indian banks and financial institutions through a bidding process, which was more like warehousing them before being off loaded in the markets.
The Air India divestment has gathered momentum with NITI Aayog recommending up to 100% stake sale, along with writing off debt. Finance minister Arun Jaitley too has backed the idea and has
held at least one round of consultations with civil aviation minister A Gajapathi Raju, with sources indicating that the entire process will be “speeded up”. Reportedly, “various options are being looked into and a final decision will be taken by the Union cabinet. ” But the civil aviation ministry has to decide if foreign airlines will be permitted to hold a majority stake in the airline.