The government may look at listing Air India as part of options to sell its shares in the national carrier after its offer of a majority stake didn’t find any takers.
These plans that also include offering the entire stake in Air India are likely to be discussed in a meeting of the alternative mechanism for disinvestment, headed by the finance minister.
“We will give all options at the alternate mechanism meeting, which will discuss and decide on one,” said a senior aviation ministry official, who did not want to be named. “We will work on Air India’s financials to ensure that it is lucrative enough for takers on the stock market,” he added.
However, there is no clarity yet on how the government would bypass a rule that makes it compulsory for a company to be profitable for the previous three financial years to become eligible for listing. Air India has not reported a profit since its 2007 merger with erstwhile Indian Airlines.
The meeting, which is likely next week, would be the first of the alternative mechanism after the government’s plan to divest 76% in Air India failed to get any interest. A meeting of the panel scheduled for last week was cancelled at the last minute due to unavailability of one of the ministers on it.
The official said listing of Air India, instead of selling the stake directly to an investor, was discussed as one of the options earlier as well.
The government had offered to sell 76% of Air India. The offer included the entire stake in low-cost international subsidiary Air India Express and 50% of ground-handling company AISATS. But it didn’t receive any interest on the proposal till May-end.
The government’s decision to retain a 24% stake in the airline after privatisation led several probable bidders to stay off, ET reported on June 4.
Concerns were also raised on too much of debt and liabilities at the entity being divested and the asset base of the carrier – all non-aeronautical assets of Air India have already been transferred to a new company named Air India Assets. If an airline company was the successful bidder, it would have to run its existing business along with Air India for some time. This was another concern for potential bidders.