Air India along with Air India Express ‘great asset’, but need to keep them flying, says minister Hardeep Puri
Civil aviation minister Hardeep Singh Puri said on Monday Air India, along with Air India Express, is a “great asset” but burgeoning debt has made its financial position fragile as the government planned to sell its entire stake in Air India Ltd.
The government had earlier in the day announced the stake sale in the debt-laden national carrier after an attempt to auction a majority stake almost two years ago failed to draw any bids.
Air India would also sell 100% stake in the low-cost airline Air India Express and 50% shareholding in joint venture AISATS, the bid document showed, as the government divests of the money-losing assets to manage the fiscal deficit.
“Air India and Air India Express are a great entity. They have lucrative slots and bilateral rights. The average age of the aircraft is eight years which in civil aviation terms young fleet,” Hardeep Puri pointed.
The minister said Air India and Air India Express have almost 51% share of the international traffic from India and their employee cost is significantly lower than other international carriers.
But, he said, even after infusing Rs 30,500 crore, Air India is still incurring losses.
“Due to its accumulated debt, the financial position is fragile and Air India is under a debt trap,” Hardeep Puri said.
“Any private investor can turn it around with efficient management … can bring in capital and turn it around,” he said.
The minister also said they learnt lessons from 2018 move when the government tried to sell 76% of Air India as well as transfer the management control to private players.
“Last time, we were heading into an election and was very conservative in some aspects like holding onto 24% stake,” he said.
“We want Air India as a brand to continue to fly but we need to privatise it,” he added.
He also said that the successful bidder would continue to use Air India brand.
They would win control of Air India’s 4400 domestic and 1800 international landing and parking slots at Indian airports, as well as 900 slots at airports overseas.
They would also get 100% of low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports, the bid document showed.
The buyer would also have to provide 3% of the value of the airline’s equity as stock options for permanent employees.