Air India appears to be inching towards privatisation, with the Cabinet expected to take a final decision eventually on the airline’s fate.
New Delhi: Will the wheel eventually turn a full circle decades after the private Tata Airlines was renamed as Air India and subsequently nationalised by the government as the national carrier?
Speculation has been triggered following repo-rts by a TV channel that the Tata Group — in partnership with Singapore Airlines — may be interested in acquiring a majority 51 per cent stake in Air India, if it is privatised by the government.
According to TV reports, a top functionary of the Tata Group is believed to have held informal talks with the government to explore the possibility of acquiring majority stake in the carrier.
If this happens, it would mean that the Tatas would once again be partners in an airline which once belonged to them.
The government currently owns 100 per cent stake in Air India and is the owner of the national carrier. In 1932, J.R.D. Tata had started Tata Airlines, which was later renamed as Air India in 1946 and subsequently nationalised in 1953.
The Tata Group is currently a partner in two domestic airlines in the country. It has partnered with Singapore Airlines in Vistara and with Malaysia-based low cost carrier AirAsia in AirAsia India.
Just about four years ago in 2013, the Tatas had indicated that they could consider investing in Air India in case it is privatised in the years to come.
In 2000, when the NDA was in power, Tata and Singapore Airlines had jointly bid for the 40 per cent disinvestment of Air India but withdrew from it in December, 2001. The disinvestment of Air India ultimately did not take place then due to political opposition.
Air India appears to be inching towards privatisation, with the Cabinet expected to take a final decision eventually on the airline’s fate. Top government sources had said recently that a major issue under consideration is the Rs 50,000 crore debt that the airline is reeling under.
Sources had said finance minister Arun Jaitley is expected to take a final view on how much of the debt, the government will shoulder by waiving it off.
The sources had said that 51 per cent or more of the airline’s stake could be sold by the government to a private entity, which will then mean that the airline is privatised.
Another option is that the government allows Air India to remain a national carrier by controlling at least 51 per cent stake.
Air India has incurred losses worth thousands of crores but is surviving based on a government bailout package of Rs 30,000 crore that began during the tenure of the UPA-2 government. But this figure could go upto even Rs 50,000 crores in the next five years, with government sources saying that the government has infused an equity of about Rs 25,000 crore into Air India in the past five years.
Air India has a debt burden of about Rs 50,000 crore and a large part of it is due to the loans taken for acquisition of 111 aircraft (68 for Air India and 43 for the erstwhile Indian Airlines) in 2005-06.
A financial Turnaround Plan was put in place for the airline in 2012 but the NDA government, after three years in power, is now convinced that the TAP will not succeed in making the airline profitable. Though Air India had reported an operating profit in 2015-16, these huge debts continue to be insurmountable.