Air India divestment: Govt may retain 24% stake

Air India divestment: Govt may retain 24% stake

New Delhi, Mar 16: The government is likely to retain 24 percent stake in Air India, CNBC-TV18 has reported citing sources. The channel also said that a notification announcing sale contours of Air India is likely to be issued by early next week.
The notification may provide clarity on debt to be transferred to a Special Purpose Vehicle (SPV) while the Expression of Interest (EoI) document is likely to be released after three weeks.
Earlier, the government had allowed 49 percent foreign investment in Air India.
The national carrier has been struggling on the back of operational inefficiencies, high employee cost and high level of net debt (Rs 54,715 crore) incurring huge losses for long.
Repeated attempts to restore efficiency have not yielded results and the government had to finally decide on privatising it along with five of its subsidiaries – Air India Engineering Services, Air India Air Transport Services, Air India Charter Limited, Airline Allied Services and Hotel Corporation of India. However, the contours of the stake sale are yet to be finalised. Subsidiaries are expected to be hived off separately, which will help pare mammoth consolidated debt.
To expedite the disinvestment process, the government has also relaxed the FDI (foreign direct investment) norm allowing foreign investment up to 49 percent in Air India through the approval route. This is expected to widen the universe of bidders thereby making disinvestment easier and faster and probably in FY19 itself.
IndiGo had expressed interest in taking over Air India’s international operations.