In­dia open to list­ing Air In­dia af­ter failed di­vest­ment

The Gulf Today - Business - - FRONT PAGE -

NEW DELHI: In­dia is open to list­ing ail­ing state car­rier Air In­dia, a govern­ment source said on Wed­nes­day, af­ter fail­ing to at­tract buy­ers for a 76 per cent stake in the com­pany.

While the govern­ment is con­sid­er­ing sev­eral pro­pos­als re­lated to re­viv­ing the di­vest­ment process, it will not al­low com­plete for­eign own­er­ship of the air­line, the source said, de­clin­ing to be named be­fore a fi­nal de­ci­sion is reached.

One of the pro­pos­als could in­volve the govern­ment re­tain­ing a share in the debt-laden car­rier and sell­ing it at a later date so it can cap­i­talise on any fi­nan­cial up­side that may oc­cur from list­ing the air­line, the source said.

The govern­ment may also con­sider re­duc­ing the debt it passes on to po­ten­tial buy­ers and re­struc­tur­ing the large work­force, an­other se­nior govern­ment of­fi­cial told Reuters.

“We will take a de­ci­sion in next few days on chang­ing con­di­tions be­fore invit­ing fresh bids,” the of­fi­cial said, adding that the govern­ment is com­mit­ted to sell­ing its stake in the na­tional car­rier in the cur­rent fi­nan­cial year but could de­fer it if it fails to get the right price.

The govern­ment in March fi­nalised plans to di­vest a ma­jor­ity stake in Air In­dia and off­load about $5.1 bil­lion of its debt, but prospec­tive buy­ers stayed away, with some cit­ing oner­ous terms as a rea­son for their lack of in­ter­est.

The lack of buy­ers in a boom­ing avi­a­tion mar­ket un­der­lines the chal­lenges the govern­ment faces in fix­ing the debt-laden na­tional car­rier, and is a set­back for Prime Min­is­ter Naren­dra Modi’s cre­den­tials as a re­former will­ing to step away from run­ning money-los­ing busi­nesses.

Air In­dia, known for its Ma­haraja mas­cot, has some of In­dia’s most lu­cra­tive in­ter­na­tional and do­mes­tic land­ing and park­ing slots that are key for air­lines.

While a buyer would have got man­age­ment con­trol and gained ac­cess to more than 2,500 in­ter­na­tional slots and over 3,700 do­mes­tic slots, it would also have been re­quired to take on Air In­dia’s 27,000 em­ploy­ees, 40 per cent of whom are per­ma­nent staff.

The terms had also stip­u­lated that the govern­ment would have con­tin­ued to hold a 24 per cent stake, with the need for the bid­der to abide by con­di­tions, not yet de­tailed, de­signed to safe­guard em­ployee in­ter­ests.

The govern­ment will soon ar­range a bank loan for Air In­dia, the sec­ond of­fi­cial said, to meet work­ing cap­i­tal needs and buy time for a few months be­fore invit­ing fresh bids.

The govern­ment may also con­sider re­duc­ing the debt it passes on to po­ten­tial buy­ers.

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