Air India will have to be shut down if privatisation fails, says minister

Indian government intends to privatise Air India, along with its subsidiary airline Air India Express and other core units, by selling off its 100% equity stake in the company

Air India has the largest share of international flying rights and seat capacities among Indian carriers
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Air India has the largest share of international flying rights and seat capacities among Indian carriers

India’s national carrier Air India will have to shut down if the on-going process for privatisation of the carrier fails, India’s civil aviation minister has said, sister publication Arabian Business reported. 

“The airline will have to close down if it’s not privatised,” federal civil aviation minister Hardeep Singh Puri has told Indian parliament on Wednesday.

“Once we invite bids, then we’ll see how many bids will come in,” the minister said.

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Indian government intends to privatise Air India, along with its subsidiary airline Air India Express and other core units, by selling off its 100% equity stake in the company.

The top brass of India’s department of investment and public asset management (DIPAM), civil aviation ministry and Air India are currently holding road shows in Singapore and other overseas centres in their bid to gauge the interest of international investors as also to take their feedback before sending out Expression of Interests (EoIs) for Air India.

Global management consultancy EY is advising the Indian government on the Air India divestment transaction.

Foreign investors, including foreign airlines and airport operators, can hold only up to 49 percent equity in Air India under the foreign direct investment (FDI) rules for the aviation sector.

​According to official sources, the government will invite EoIs for Air India disinvestment soon after completion of road shows, and plans to invite bids by early next year. The process is to be completed by next March end.

Indian government also plans to bring down the massive debt liabilities of the national carrier -  estimated to be $7.9 billion (Rs 570 billion) – to about $2.77 billion (Rs 200 billion) to make it more attractive for investors.

The Air India privatisation move is widely expected to succeed this time around, with Indian conglomerate Tata group and a couple of European airlines are said to be interested in bidding for the carrier.

Air India has the largest share of international flying rights and seat capacities among Indian carriers.

Meanwhile, India’s insolvency court, National Company Law Tribunal has issued a notice to Air India on Wednesday, asking why bankruptcy proceedings should not be initiated against the airline. The notice was sent in response to a pilot’s petition seeking outstanding salary dues.

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