Air India break-up an option as PM pushes for quick sale

India is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said.

Prime Minister Narendra Modi’s cabinet gave the go-ahead last month for the government to try to sell the airline, after successive governments spent billions of dollars in recent years to keep the airline going.

Air India - founded in the 1930s and known to generations of Indians for its Maharajah mascot - is saddled with a debt burden of $8.5 billion and a bloated cost structure.

The government has injected $3.6 billion since 2012 to bail out the airline.

Once the nation’s largest carrier, its market share in the booming domestic market has slumped to 13 percent as private carriers such as InterGlobe Aviation’s IndiGo and Jet Airways have grown.

Previous attempts to offload the airline have been unsuccessful. If Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country’s most intractable problems.

His office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named as they were not authorized to speak publicly about the plans.

The timeline is ambitious and the process fraught, with opinion divided on the best way forward: should the government retain a stake or exit completely, and should it risk being left with the unprofitable pieces while buyers pick off the better businesses, officials said.