The government has decided to put Air India disinvestment plan on the back burner in the election year, citing high fuel prices is not good for privatisation of the state-run airline. The government will, however, continue to provide required funds for its operations, a senior official said today.
“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 told PTI.
The source said, “Certain conditions have to be met before listing a company. Once Air India fulfils those, we will go in for an initial public offering and subsequent listing,”
The decision was taken at the top level meeting chaired by Union Minister Arun Jaitley yesterday. The meeting was attended by Finance Minister Piyush Goyal, Civil Aviation Minister Suresh Prabhu, Transport Minister Nitin Gadkari and other senior officials of finance and civil aviation ministries.
The ministers also discussed the report prepared by EY, the advisor for Air India’s proposed strategic stake sale, listing out reasons why the state-run airline failed to attract any initial bids. The decision has come after the proposed 76 per cent strategic stake sale in debt-ridden national carrier failed to attract any bidder.
Air India has the mounting debt of more than Rs 50,000 crore. It will soon get funds from the government for its day to day operations. The government official also said that the state-run airlines will place orders for a couple of aircraft
“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.
The government is looking at turning around the company to ensure that it makes profits on overall basis before going in for listing.
As per Sebi norms, a company has to post profit in previous three financial years before it can list itself in the stock exchanges.
(With inputs from PTI)