Govt decides to put Air-India sale on hold for now
The government has decided not to go ahead with Air India stake sale in an election year and will provide required funds for its operations, an official said. The decision comes less than 3 weeks after the proposed 76% strategic stake sale in debt-laden national carrier failed to attract any bidder. The government will soon provide funds for its day-to-day operations, the official added.
Why was the decision to put off stake sale taken?
The decision to put off Air India stake sale was taken at a high-level meeting convened by Union Minister Arun Jaitley yesterday. "The airline is posting operational profits. None of the flights go empty. With all the cost-efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now," the official added.
Company needs to post 3-years profit before listing in stock-exchange
The government is taking measures so that Air India makes profits before going in for listing. "Certain conditions have to be met before listing a company. Once Air India fulfills those, we will go in for an initial public offering," a source said. As per SEBI norms, a company has to post a profit in previous three financial years before listing in stock exchanges.
What will the government do to improve airline's functioning?
"The focus is on improving operational efficiency. We will continue to boost employee morale, starting from the top level, to better the functioning of the airline. Funds would be provided as and when required," the source added.
Government had planned to offload 76% equity share of AI
The government had originally proposed to offload 76% equity share capital of Air India as well as transfer the management control to private players. The buyer would have had to take over Rs. 24,000cr debt of the carrier along with over Rs. 8,000cr of liabilities. However, the stake sale failed to attract any bidders when the bidding process got completed on May 31.
