The government is open to the idea of selling part of debt-ridden state airlines Air India to a foreign airline, with preliminary bids expected to open by October 10, according to a Reuters report.
The report, which cites ‘sources familiar with the matter’, says that 30,000 crore rupees ($4.21 billion) of Air India debt has been moved to a holding company, with the airline still left with a roughly equivalent amount of debt.
The move is likely to be controversial as, in July, 13 employee unions of Air India issued a strong statement against any move to privatise the airline. The unions were told that divestment of Air India was part of the government’s plan.
In Finance Minister Nirmala Sitharaman’s Budget speech, it was announced that Air India would be privatised. The minister said, “In view of the current macroeconomic parameters, the government would not only re-initiate the process of strategic disinvestment of Air India, but would also offer more central enterprises for strategic participation by the private sector.” The same budget earmarked just a single lakh for the airline.
An attempt to sell 76 per cent of the airline’s stake in 2018 failed.
Air India has more than Rs 58,000 crore worth of debt. The company has around 20,000 employees and has warned that it would be unable to pay salaries past October. The previous year saw thousands go unpaid for months as the airline struggled to arrange its finances. In addition, many oil companies refused to supply oil to the carrier in August on account of its pending payments nearing 5,000 crore rupees.
In September, 2019, the airline recovered around Rs 7,000 crore from selling its bonds at a lower rate. A spokesperson for Air India Assets Holdings Ltd (AIAHL) said, "The company received bids worth Rs 20,830 crore, which is the highest in the yield based bond market in the history of BSE. The company has decided to accept the entire issue of Rs 7,000 crore”.