Govt may sell 51% stake in Air India to a strategic partner: Report

BT Online        Last Updated: February 28, 2017  | 14:12 IST
Govt may sell 51% stake in Air India to a strategic partner: Report

Government may soon sell its majority stake in country's national carrier Air India to a strategic partner in a bid to turn around the loss making airline, a Bloomberg report said.

The proposal includes reviving Air India within five years of selling a 51 per cent stake. Talks are at an initial stage and presentations have been made to the finance ministry and the prime minister's office, the report said quoting people who did not want to be identified.

Under a financial restructuring plan in 2012, Air India was slated to receive Rs 30,231 crore equity infusion over 10 years. It has received some Rs 23,993 crore so far. Even after pumping in huge money, the airline has not shown significant financial and operational improvement. For instance, the airline reported losses of Rs 3,587 crore in 2015/16, down from Rs 5,859 crore in 2014/15.

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Air India is gradually losing market share in the domestic market to private players - both old and new. Its market share has dipped from 18.4 per cent in 2014 to 14.6 in 2016. An operating profit of Rs 105 crore in 2015/16 is the only silver lining.

Air India's woes began soon after it merged itself with Indian Airlines. Two years prior to that, it had decided to buy 111 Boeing aircraft -a decision which came under scrutiny. Recently, the apex court has asked the Central Bureau of Investigation to conclude a probe into alleged irregularities in purchase (or hiring) of those 111 aircraft. It cost the exchequer about Rs 70,000 crore.

The national carrier seems to be a bottomless pit. Air India's cost structure, including high employee-to-aircraft ratio, keeps the airline away from profitability. A turnaround - without considering privatisation (or even a strategic sale) at some point - appears to be a pipe dream.

The carrier's share in the local market has shrunk to 14 per cent from 35 per cent a decade back, placing it third in the national ranking.

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