National carrier would fetch govt a fair price if overseas airlines are allowed to bid, says report.
Mumbai: The panel headed by Finance Minister Arun Jaitley may take up a proposal that seeks participation of foreign airlines in Air India's stake sale. At present, the government is eying a lucrative deal to resuscitate the ailing Air India. The Union Cabinet has also given in-principle approval to privatisation of national carrier.
A report carried by The Economic Times website cited a senior government official who said that allowing foreign airlines to take part in Air India stake sale was not ruled out. “This (sale to foreign airlines) was one of the options suggested in the presentation made to the ministerial panel by the aviation secretary,” ET quoted the official as saying.
It may be noted that the group of ministers set up to oversee and implement Air India divestment did not nod in negative when the proposal was brought on its table. It also did not object to the idea of a foreign bidder for Air India, the report added.
While a foreign investor can own up to 100 per cent in an Indian airline, an overseas carrier can own only up to 49 per cent in an Indian carrier, according to FDI in aviation rules.
The proposal cropped up first on July 21 when the group of ministers held its first meeting and discussed possible options for Air India's privatisation. Civil Aviation Minister Ashok Gajapathi Raju, Power Minister Piyush Goyal and Railway Minister Suresh Prabhu were part of the talks.
Air India has been flying in rough weather since it merged into itself another state-owned carrier Indian Airlines a decade ago. Since then AI has not registered a quarterly profit and has run into huge losses.
The national carrier has a loss of Rs 50,000 crore and a debt of Rs 52,000 crore. Besides, the airline has a working capital of loan of Rs 30,000 crore. In 2012, the erstwhile Congress-led UPA government headed by Prime Minister Manmohan Singh had extended a Rs 30,000 crore bailout package to keep the airline afloat.
As of now, domestic no-frills carrier IndiGO has shown its interest in buying AI's international business. The panel led by Finance Minister Arun Jaitley is expected to finalise modalities of Air India stake sale in six months.