New Delhi: The government on Wednesday said it would revisit the Air India disinvestment plan after oil prices, foreign exchange rates and other global economic indicators stabilise.
Asserting that the government remains committed to the disinvestment of Air India, Union Minister of State for Civil Aviation Jayant Sinha told the Rajya Sabha that the national carrier has shown “considerable improvement" in operational and financial parameters in the recent past.
The government’s proposal to sell a 76% stake as well as transfer management control of the debt-laden airline to private players failed to take off in May. Sinha said transaction advisor EY had cited the 24% government residual holding and corresponding rights, and high amount of allocated debt as reasons for not receiving any bids.
Other reasons cited by EY were “changes in the macro environment, individuals not being allowed to bid, profitability track record, and bidders not being able to form a consortium within a given time period", according to written replies provided by the minister.
The stake sale plan did not attract any bidders when the deadline for submitting expressions of interest ended on 31 May. “In view of volatile crude oil prices and adverse fluctuations in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in the immediate future."
Further, the minister said near and medium-term efforts would be initiated to improve Air India’s performance. He also said the Air India Specific Alternative Mechanism (AISAM) would separately decide the contours of the mode of disposal of subsidiaries Air India Engineering Services Ltd (AIESL), Air India Air Transport Services Ltd (AIATSL) and Airline Allied Services Ltd (AASL).
The debt-laden Air India’s losses after tax stood at ₹ 5,765.16 crore in 2016-17. The national carrier received an equity infusion of ₹ 27,195.21 crore till end of financial year 2018 under a bailout package approved by the previous UPA government in 2012.
As part of turnaround strategy for the carrier, Sinha said a number of steps have been initiated to cut costs and losses. These include the setting up of a route rationalisation committee to ensure revenue maximisation by continuously looking at load factors, revenue yields and competitor fare structure.