IndiGo shows interest in Air India's divestment

30 June, 2017, 01:01 | Author: Clint Gray
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The Indian government's decision to privatise debt-laden Air India has drawn criticism from unions, which say the move endangers the job security of existing employees.

IndiGo, operated by InterGlobe Aviation Ltd, sent in its interest late Wednesday night, minister of state for civil aviation Jayant Sinha said.

A joint forum of Air India employees said it is against the decision and will seek a meeting with Modi to discuss it. The cabinet last night took the first step in offloading the airline with an "in-principle" approval for the sale of a stake in Air India, which is bogged down by $8 billion or Rs 52,000 crore in debt.

India cabinet gives in-principle nod to strategic sale of state-run firms

IndiGo "would be interested in buying out the global operations of Air India and its low-priced wing, Air India Express", President Aditya Ghosh said in his letter, according to The Indian Express newspaper. The private airlines enjoy 86 per cent of the market share.

"How much will be disinvested, by which process, its assets and debt, as also its hotel companies, will be deliberated", Jaitley said.

IndiGo has high probability of buying Air India's overseas business since it has been profitable for nine consecutive years and is the largest airline in terms of market share.

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The carrier, which is known for its Maharajah brand icon, traces its roots to Tata Airlines, founded in the 1930s by the then-patriarch of Tata Group, J.R.D.

Arvind Panagriya, an adept economist and the vice chairperson of Niti Aayog said that the debt of Air India was "unsustainable".

The new logo features prominently on the tail of the aircraft. Where did the mascot "The Maharajah" come from? Its valuation of aircrafts will be at Rs 20,000-25,000 crore.

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The civil aviation ministry is charting out the disinvestment of the state-run carrier.

"In its proposal the civil aviation ministry had urged to constitute a group under the finance minister which can decide on the concerning modalities of the same, the cabinet has accepted that".

The finance ministry said Wednesday that the government has agreed in principle to sell part of its holding in the airline, which has struggled to become profitable as competition from a number of low-priced airlines has grown. Set up by Tatas, the carrier was made a public company and was rechristened as Air India. Tata Group, after several decades, re-engaged with the Indian aviation market when it launched an airline, Vistara, in conjunction with Singapore Airlines as well as got a stake in Air Asia.

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