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Modi Cabinet Gives In-principle Approval for Disinvestment of Air India

Finance Minister Arun Jaitley on Wednesday announced the Union Cabinet has given in-principle approval for disinvestment of Air India.

News18.com

Updated:June 29, 2017, 8:25 AM IST
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New Delhi: Finance Minister Arun Jaitley on Wednesday announced the Union Cabinet has given in-principle approval for disinvestment of Air India.

"The Cabinet today gave an in-principle approval to the divestment of Air India," Jaitley said after the Cabinet meeting.

A group under Jaitley has been formed to decide upon the modalities of Air India's stake sale. "It will now take a decision on the quantum of stake sale and take a call on Air India's assets, debts and its hotel subsidiary," Jaitley said.

The Cabinet choose between two options suggested in a presentation by the Department of Investment and Public Asset Management. The discussions were on both the Niti Aayog’s recommendation of complete privatisation and the civil aviation ministry's proposal of debt reduction.

Jaitley however, refused to give a timeline on disinvestment.

In an interview with CNBC TV18 earlier this month, Jaitley had said, "In addition to the existing players, if private players also participate in Air India’s proposed privatisation, it will add to the competition in terms of quality and the speed of growth of the sector too."

"Aviation is turning into a good business in our country. Our airports are better than most countries, we have better connectivity. I do see a great future for the aviation sector. We have around 500-600 aircraft. China has 5000. We will definitely have a big number of aircraft flying in 10 years," he had said.

The government think-tank Niti Aayog had strongly recommended total privatization of Air India to make it viable.

Staying afloat on little over Rs 30,000 crore bail-out package extended by the previous UPA regime, Air India is saddled with nearly Rs 52,000 crore debt and is in discussions with lenders on ways to restructure the loans.



Since the merger of Indian Airlines with itself, Air India has been in the red. However, it posted an operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers in 2015-16.


Air India disinvestment in BIG numbers

STAFF 11,912 (regular) (as on Mar 31, 2017)

AIRCRAFT 107

WAGE BILL Rs 2,400 cr

ATF BILL Rs 5,745 cr

MARKET SHARE (Domestic): 14% (2016-17)

MARKET SHARE (International): 25% (2016-17)

ON-TIME PERFORMANCE: 76% (as opposed to 85% industry standard)

TOTAL DEBT: Rs 52,000 cr

LOANS FOR AIRCRAFT Rs 20,000 cr

WORKING CAPITAL LOAN Rs 30,000 cr


AIR INDIA – THE GREAT DESCENT

1932: Tata Airlines begins offering air services in India

1946: TATA Airlines is renamed Air India

1953: Air Corporation Act passed. Air India nationalised along with seven other private carriers

1981: a new carrier Vayudoot established to act as regional feeder airline

1986: To boost tourism, private air taxis allowed to fly with riders

1993: After Rs 200 crore annual loss, Vayudoot merged with Indian Airlines, adding to its debt burden

1994: Air Corporation Act repealed, private carriers allowed again

2003: Naresh Chandra Committee report calls for the privatisation of both IA and AI but faces stiff opposition

2005: AI signs a purchase agreement for 50 Boeing aircraft, at a cost of Rs 33,197 crore

2007: AI and IA merged into National Aviation Company of India Ltd, headquarters at Delhi

2010: the company is renamed Air India

2011: C&AG hauls up Air India and Civil Aviation Ministry for reckless purchase of aircraft which led to major losses

2012: Centre govt sanctions a turnaround plan for AI @ Rs 42,182 crore to be infused from 2011-12 to 2031-32

2014: Air India becomes a member of Star Alliance, boosting international connectivity

2016: C&AG reports faults MoCA and AI for poor implementation of turnaround plan

2017: Air India looses mount to Rs 52,000 crore, crippling the airline and forcing the govt towards its privatisation
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