Government sanctions the disinvestment of National Carrier Air India

The debt laden National carrier Air India has been approved for disinvestment by the Union Cabinet. This paves the way for Privatization of the national carrier which has been running on the tax payers money all this while. A group of ministers headed by Finance Minister Arun Jaitley have been formed by government to look into ways to disinvest its equity stake in the national carrier.

Air India at present is under immense pressure due to high competition from more efficient and cheaper private airlines. Airlines has not made any profit for the past 10 years. The total debt sums up to Rs 52,000 Crore of which Rs 28,000 Crore in working capital debt and Rs 4000 Crore is alone in in interest burden. Over the years their share market value has also fallen from 35 % to 14 % in last 10 years.

TATA Group, the founder of Air India before it was handed over to government has shown keen interest in buying the airlines. Group Chairman N Chandrashekaran held informal talks with the government over buying a controlling stake of 51% of the airlines. Government who would want to retain Air India as the Domestic carrier is keen on closing the deal with Tata Group. But Tata group has also brought in Singapore Airlines to buy the remaining 49% of stake if the government is planning for a full privatization.

Azam Sait

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