Sale of Air India in parts an option, Latest Business News - The New Paper

Sale of Air India in parts an option

This article is more than 12 months old

NEW DELHI India is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said.

Prime Minister Narendra Modi's cabinet gave the go-ahead last month for the government to try to sell the airline, after successive governments spent billions of dollars in recent years to keep the airline going.

Air India - founded in the 1930s - is saddled with a debt burden of US$8.5 billion (S$11.7 billion).

The government has injected US$3.6 billion since 2012 to bail out the airline.

Once the nation's largest carrier, its market share in the booming domestic market slumped to 13 per cent as private carriers such as IndiGo and Jet Airways grew.

Mr Modi's office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named.

The timeline is ambitious and the process fraught, with opinion divided on the best way forward: Should the government retain a stake or exit completely, and should it risk being left with the unprofitable pieces while buyers pick off the better businesses, officials said.

Already, a labour union that represents 2,500 of the airline's 40,000 employees has opposed the idea of a sale even though it is ideologically aligned to Mr Modi's Bharatiya Janata Party.

Air India has six subsidiaries - three of them loss-making - with assets worth about US$4.6 billion.