DELHI: India will break up Air India, its state-run, loss making flag carrier into four separate companies and offer to sell at least 51 per cent in each of them as part of a disinvestment proposed by the prime minister, report agencies.
The core airline business comprising Air India and — the low-cost overseas arm — will be offered as one company, and the process will be completed by the end of 2018, junior aviation minister said in an interview on Monday.
Its regional arm, ground handling, and engineering operations will also be sold separately in the same process.
A successful sale of Air India — with about Rs 51,000 crore in debt, five subsidiaries and a joint venture, and a combined workforce of 27,000 — is crucial for prime minister Narendra Modi, who wants to showcase his credentials as a reformist. The airline, which is surviving on a taxpayer-funded bailout, has strained government finances for decades, and finance minister said last year that money spent on Air India could have been used for education.
“The aviation sector is a very fast growing sector, with really exciting opportunities for all participants, so we felt all of this will unlock growth and competitiveness of Air India group,” Sinha said. “We expect it to be a very bright future for its employees.”
Sinha declined to name potential bidders but said management control will be retained by local investors. The government altered foreign investment rules last week, allowing foreign airlines to own as much as 49 per cent of Air India. Investors‘ interest will be sought by end of this month with details on Air India‘s core and non-core debt and assets, he added.
The government will add most of the non-core debt owed by the carrier to its own balance sheet, while borrowings linked to core operations will be retained by the unit on offer, Sinha said.