Air India's Privitisation Panel

Senior Union ministers Nitin Gadkari, Suresh Prabhu, Piyush Goyal and Ashok Gajapathi Raju will be part of a five-member ministerial panel headed by finance minister Arun Jaitley tasked with deciding the process of privatising Air India, which may start by December.

The committee's brief is to finalise the structure and procedure of privatising the debt-laden national carrier. The government wants the process to be finalised speedily and bidding to start within six months.

The Union cabinet cleared the divestment of loss-making Air India and five of its subsidiaries last week. It said the ministerial panel will decide on how much stake will be divested and the universe of bidders -whether a foreign company can bid.

The panel will also determine how the airline's unsustainable debt will be treated, the spinning off of assets to a shell company , and demerger and strategic disinvestment of three profit-making subsidiaries. Air India's three profit-making units are low-fare international carrier Air India Express, ground-handling unit AI Transport Services and AI-SATS, a 50:50 ground-handling JV with Singapore Airport Terminal Services.

The government decided to sell Air India after hopes of the airline's revival turned bleak, with losses of more than Rs.50,000 crore and debt of about Rs.55,000 crore continuing to accumulate.

The Tata Group and low-fare carrier IndiGo have shown interest in acquiring Air India. While the Tata Group has not made its interest official, IndiGo has written to the aviation ministry saying it may bid for the airline. IndiGo president Aditya Ghosh said in a letter to employees that its “interest in Air India is primarily in its international operations.“

IndiGo cofounder Rakesh Gangwal has significant experience with turnarounds as former CEO of US Airways. He has also dealt with airline unions, which might come in handy in any possible acquisition of Air India.

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi approved the recommendations of Niti Aayog on strategic disinvestment of Air India and five of its subsidiaries based on the recommendations of the Core Group of Secretaries on Disinvestment.

The government may look at exiting Air India completely. The Niti Aayog proposed total privatisation of the national carrier in a report to the Prime Minister's Office.

The Aayog cited British Airways, Japan Airlines and Austrian Air as international examples of governments selling their entire stakes in airlines and not retaining any shareholding to make them viable.

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