New Delhi: Air India employees may get to buy shares in the national carrier once it’s privatised as the Centre is mulling an employee stock ownership plan (ESOP) out of its own 24% stake, Civil Aviation Minister Jayant Sinha has told CNBC TV-18.
ESOP is a scheme whereby employees are encouraged to acquire shares in the company. The move would take the government’s stake in the national carrier below 20 percent, but gives employees a chance to be a part of Air India’s future growth, Sinha said.
The government had on Wednesday unveiled plans to sell up to 76% in Air India and transfer the management control to private players, starting the ambitious strategic disinvestment process for the debt-laden national carrier. As per the original plan, the government was to retain 24 percent stake, while the winning bidder would be required to stay invested in the airline for at least three years.
Starting off the disinvestment exercise — a major initiative of the NDA government — Expression of Interest (EoI) has been sought from various entities, including foreign airlines.
In its preliminary information memorandum on the stake sale, the government has assured the payment of any pending wages to Air India employees.
Detailing the disinvestment plan, Sinha said the government will absorb some debt in a holding company. Over Rs 24,576 crore of interest-bearing debt will be transferred to the new Air India, while the remaining Rs 25,000 crore will stay with the asset holding company, moneycontrol.com reported.
“We want to participate in value creation which will be done by the new owners,” Sinha said, adding that the government would cede all control and keep only residual stake in the carrier.
Defending the disinvestment plan amid criticism from opposition parties like the Trinamool Congress, Sinha said handing over the carrier to a “professional team” was necessary to restore the Maharaja’s past glory. He added that no central government anywhere in the world operates an airline.
Bidding for the airline can be done as a single player or as part of a consortium. The bidder should have a minimum net worth of Rs 5,000 crore and the requirement is subject to certain conditions depending on the class of entities. Among others, the Civil Aviation Ministry has said that each consortium member should have positive profit after tax in at least three of the immediately preceding five financial years from the Expression of Interest (EoI) deadline.
The last date for submission of EoI is May 14 and intimation to the qualified interest bidders would be made on May 28.
Air India had a fleet of 115 aircraft as of December 2017 and serves around 39 international destinations. As on December 1, 2017, the airline had 11,214 permanent employees and 2,913 on contract, among others. The national carrier has been staying afloat on taxpayers' money under the turnaround plan approved by the previous UPA government in 2012.
(With agency inputs)