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LETTERS TO THE EDITOR

Not easy to ground Air India privatisation

| | Akola
Not easy to ground Air India privatisation

This refers to the editorial, “A suitable suitor” (April 12). The NDA Government's decision to privatise Air India was hailed cutting across sections because Air India was deemed to be a through and through loss-making public sector enterprise. It was a long overdue measure though Air India's profit went up in the financial year 2016-17. The terms and conditions of sale of Air India were an admixture of innovation and rigidity.  Importantly, potential buyers' net worth should be Rs 5,000 crore and they should have reported profit, after tax, in three of the five previous years. The highest bidder will have to remain invested in the company for three years before any sale of stake if no compulsory listing. Also, a successful bidder cannot integrate the airline with the existing business as the Government continues to have a 24 per cent stake in Air India.

It cannot be, therefore, assumed that Air India's disinvestment plan has received a severe jolt with the backing away of two leading airliners. Obviously, these private players were piqued with the terms and conditions. A research report of SBI Caps has estimated Air India’s value to be approximately $2.5 billion (approximately Rs 162 billion). With the Government retaining some stake, and the unimaginable task of turning Air India around after pumping in an astronomical amount, is putting potential investors off. The Government is keen to sell the core airlines business Air India and Air India Express by the turn of this year. But that ambition may have to be tempered with regaining potential investors' confidence. Whether or not the Government is agreeable to relaxation of certain terms is the moot point.

 
 
 
 
 

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