Op­tions for dis­in­vest­ment of AI

Vayu Aerospace and Defence - - Aviation Defence & in India -

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.

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