Air India's net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore. (Photo Credit: File Photo)
It’s official! The second attempt to sell the entire stake in the national carrier Air India began on Monday with the Narendra Modi issuing the preliminary information memorandum. The Centre has set March 17 as the deadline for submitting the Expressions of Interest. As part of the mega divestment, Air India would also sell 100 per cent stake in low cost airline Air India Express and 50 per cent shareholding in joint venture AISATS. Management control of the airline would also be transferred to the successful bidder. According to the official document, Ernst & Young has been appointed as the transaction adviser for Air India disinvestment process.
The announcement comes days before the first full Budget of the Modi government 2.0 staring at massive fiscal deficit. Earlier there were reports that the Modi government has budgeted to garner Rs 1.05 lakh crore from divestments of key entities such as Air India and BPCL. Interestingly, the arts, paintings, objects and artefacts belonging to Air India will not be part of the divestment process. Also, Air India and Air India Express need to be bought together. Air India’s iconic Mumbai building will not be sold.
In November last year, Air India Chairman and Managing Director Ashwini Lohani had written an open letter to the airline’s staff. Lohani wrote candidly about the cash crunch and other issues plaguing the airline. “As you all are aware Air India has been going through an extremely stretched financial situation, primarily due to huge debt servicing liabilities that has been affecting the airline. The position gets compounded due to legacy issues and the constraining environment that being a PSU, we are forced to live with. Being an airline we function in a highly competitive environment, an environment in which our competitors are not constrained by the procedures, restrictions and oversight that we at Air India face placing us at a handicap both financially as well as operationally,” Lohani wrote in the open letter.
Air India's net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore. The national carrier, which has a debt burden of more than Rs 50,000 crore, has been making loss for long and as part of revival efforts, the government has decided on disinvestment.