The government has decided to completely exit from Air India as it sets out on another effort aimed at divesting the carrier. A plan to sell a 76% stake last year failed. Air India has a debt of nearly 31,000 crore after the government took over Rs 29,000 crore off its books. The airline’s interest burden was reduced by 2,400 crore to 1,700 crore annually.

Also, last week, oil marketing companies stopped fuel supplies to the Air India Group at six airports because of dues of about Rs 5,000 crore. This mainly affected operations of the Alliance Air unit reports Economic Times.

The civil aviation minister has confirmed the news

Hardeep Puri, civil aviation minister of India confirmed that the government will completely exit Air India. Also, there is already significant interest among prospective buyers for it.“Air India should be totally privatised. We have to get the best possible deal and we have to get it in the shortest possible time available,” said Puri. The government had previously decided to retain 26% stake in the airlines during the last attempt at sales. According to the transaction advisor, this decision didn’t sit well with prospective buyers. 

air india

Fate of the airlines still undecided

No bidder has turned up to invest in the carrier when the deadline for expression of interest expired on 31 May 2019. Operating losses at Air India have reduced to one-fourth in the first four months of FY20. The government had decided to retain 26% stake in the national carrier during the last attempt for sale, which, according to the transaction adviser, spooked the prospective buyers. The group of ministers for Air India’s sale are expected to meet soon. 

With the complete grounding of Jet Airways since April, other domestic carriers including Air India have been able to improve their passenger revenues and yields. “We have been able to improve our revenues despite no new planes being added to our fleet. Our flight occupancy was up 2% y-o-y in July and yield was also up 10% year on year last month. Our only problem is servicing high debt,” said Ashwini Lohani, chairman and managing director of Air India.

 

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