October Deadline Likely For Air India Disinvestment. GoI Open To The Idea Of 100% Stake Sale. Lohani To Meet AI Unions

Close on the heels of Finance Minister Nirmala Sitharaman announcing in her budget that the NDA government will re-initiate moves to sell the national carrier Air India, its chief Ashwani Lohani has convened a meeting of all the 13 unions today (Jul 8) to discuss the terms of privatisation, The Times of India reported.

“In view of the current macroeconomic parameters, the government would not only reinitiate the process of strategic disinvestment of Air India, but would offer more central public sector enterprises for strategic participation by the private sector,” Finance Minister Nirmala Sitharaman had said in her Budget speech on Friday.

The Finance Minister also said that the government was examining a proposal to hike the foreign direct investment limit in aviation.

The government is reportedly targeting October as the deadline for announcing the deal.

Lohani’s proposed meeting with 13 different unions of Air India assumes significance given that the unions have vehemently opposed sale of the airline in the past. The union contend that privatization is no pancea for the trouble national carrier pointing to the bankruptcy of Kingfisher and Jet Airways.

Lohani is expected to address the fear and apprehension of the employees over possibility of manpower rationalisation in case of privatisation. The employee union is also expected to take up the issue of salary payment beyond October by when the airline may run out of cash unless fresh equity infusion takes place. AI’s annual wage is currently estimated to be Rs 2,400 crore. Air India has around 9- 10,000 permanent employees and another 3,000 on contract.

The Union government also indicated that it may be willing to completely exit loss-making state run airliner.

The Times of India quoted the Secretary, Department of Investment and Public Asset Management (DIPAM) secretary Atanu Chakraborty as saying “A general feeling (in the government) is that if people want to have full (control), let them have it. But I will be able to tell you only when a specific decision is taken. My personal view is that I do not see any conflict for the government.”

The Centre is also pursuing the option of selling the airline’s subsidiaries before the airline itself, in order to effectively deal with the outstanding debt of around Rs 27,000 crore. The idea would be to sell airline’s assets – the planes, the airline’s landing slots, its land and buildings, its ground handling unit – in bits and pieces, leaving out the debt. The net price received for these parts can be set off against the debt, and the balance debt shifted to the government’s books.

The previous attempt by the NDA government to sell the airliner failed to get any bidder as the government’s decided to retain 24% stakes. This was believed to be one of the primary reasons for not generating any interest from buyers.