Reports in India suggest that the Indian government has paved the way for 95% of Air India to be sold to private investors.
A committee led by Cabinet Secretary P. K. Sinha will be tasked with achieving this latest attempt at privatization by the end of August, as the Indian government attempts to offload its stake in the major carrier.
Based on its current plans, the government will retain a 5% stake in Air India but will seek to almost fully divest its interest to the private sector. The state seemingly intends to maintain this small proportion of the company in order to maintain Air India’s state-funded pension plans.
The sale process will be subjected to the approval of ministerial commissions before it is rubber-stamped. Documents seen by the Indian publication The Business Standard suggest that Expressions of Interest will be sought from relevant parties at some point during October this year.
However, the process of selling off Air India may not be as smooth as the government hopes. Previous attempts were made to sell a 76% stake in Air India last year, but the Indian government was unable to identify any suitable bidders.
The initial move to privatize Air India dates back to June 2017, at which time the cabinet of the country approved plans to alter the financial arrangements of the airline.
Air India has struggled financially in recent quarters and has accrued around 583.5 billion rupees (US$8.2 billion) worth of debt.
The flag-carrying airline of India has experienced many months of financial malaise, with reports in India suggesting that the company was perilously close to defaulting on its debt. This news came just days after fellow Indian airline Jet Airways suspended all operations, and followed attempts by the Indian government to prop up Air India with a $330 million investment.
In an attempt to improve its financial position, Air India has reportedly renewed a sell-off of many of its real estate assets, with 60 properties having been put up for auction. Most of the real estate listed is residential, with state-owned specialist MSTC having been enlisted to assist with the process.
Again, though, this initiative is fraught with uncertainty. The real estate market can be unpredictable at the best of times, but Air India also previously attempted to raise five billion rupees (US$70 million) from real estate sales earlier this year but failed to reach this target.
Air India was once the sole airline in India but has suffered in an increasingly competitive marketplace, with its share of the domestic market even receding from 14.6% to 12.4% over the last couple of years.
Nonetheless, despite the problems that Air India faces, the carrier was at least recently able to celebrate being the first Indian airline to operate commercial flights over the North Pole. This was achieved on 15th August, by a flight from San Francisco destined for Delhi.