Government May Bring IPO of Air India to Turn Around Debt-Ridden Company

The government is open to list the debt-ridden state carrier Air India, after it failed to attract any suitor for buying a 76 percent stake in the company.

The government may list the debt-ridden state carrier Air India, after it failed to attract suitors for buying a 76 per cent stake in the company, according to media reports. In order to revive its disinvestment proposal, the government is even considering to sell its entire 100 per cent stake in the company, as several potential buyers saw it as a deterrent in turning around the company.

Highlights

Government considering alternative ways to revive Air India
It may bring IPO to list the company
Government open to selling 100 per cent stake in Air India

The government is looking for the alternative ways, headed by the finance minister, for reviving the company. A committee of secretaries will prepare the proposal headed by the cabinet secretary.

Economic Affairs Secretary, Subhash Chandra, Garg told Bloomberg in New Delhi, “A certain kind of strategy was offered that didn’t find many takers and, therefore, something different will have to be done. There’s no fixed objective that the government should have 24 per cent. It can be re-examined.”

Garg further said that while policymakers looked at the 24 per cent stake as a “confidence-building measure,” it proved as deterrent causing lack of bids.

Add India.com as a Preferred Source

The disinvestment process of Air India started on March 28 to sell up to 76 per cent stake in the company along with management control. Earlier several airlines showed interest in picking the stake but later withdrew citing management issues. For example, Indigo was not interested in buying the whole company but just its international operations and Air Express, which is the low-cost arm of the government carrier.

Aditya Ghosh, IndiGo’s former president earlier said in a statement, “From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express. However, that option is not available under the government’s current divestiture plans for Air India”. He added “Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of AI’s airline operations.”