Govt planning to sell Air India in parts?

New Delhi, July 9: The government 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, officials familiar with the situation said.

Prime Minister Modi’s Cabinet gave the goahead last month for the government to try to sell the airline. Air India is saddled with a debt burden of $8.5 billion. The government has injected $3.6 billion since 2012 to bail it out. Once the nation’s largest carrier, its market share in the domestic market has slumped to 13 per cent as private carriers have grown.

India is considering selling stateowned 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 per cent as private carriers such as 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 authorised 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.

Already, a union that represents 2,500 of the 40,000 employees has opposed the idea of a sale even though it is ideologically aligned to Modi's BJP.

Officials who have to make it happen are grappling with the sheer scale of the exercise. Air India has six subsidiaries – three of which are lossmaking – with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.

No one has properly valued the company's various businesses and assets before, two officials with direct knowledge of the process said.