In a step closer towards the privatisation of state-owned Air India, a Group of Ministers headed by Union Home Minister Amit Shah Tuesday approved the Expression of Interest (EoI) as well as the share purchase agreement for the debt-ridden carrier.
The EoI and the share purchase agreement will be issued in January itself for the bidders, news agency PTI reported. This was the second meeting of the GoM after September last year.
The strategic divestment of the debt-ridden airlines has been a cause of concern for the government after the Air India Specific Alternative Mechanism (AISAM) approved the re-initiation of the process for the government’s 100 per cent stake sale in Air India along with Air India Express and the carrier’s stake in joint venture AISATS.
The cash-strapped carrier has been surviving on government support for many years. in 2018, the government’s attempt to sell 76 per cent of its equity in Air India did not attract investor interest as the Centre retaining 24 per cent stake in the carrier was seen as dissuading private players.
With a debt burden of Rs 58,000 crore, the government is still working on the modalities for the disinvestment of the airline. Last week, Air India Chairman and Managing Director Ashwani Lohani debunked rumours regarding shutting down operations of the airline, calling them “baseless” while asserting that it still was India’s biggest carrier.
Lohani’s remarks come a month after he told the Civil Aviation Ministry that Air India’s financial situation was “grossly untenable” for sustaining operations. Earlier, Union Aviation Minister Hardeep Singh Puri had too warned that the airline would have to shut down and stop operations if it was not privatised.
In December 2019, Puri had told Lok Sabha that preparation of a Preliminary Information Memorandum for inviting Expression of Interest (EoI) for 100 per cent divestment of government stake was underway.
The government has also provided equity infusion for Air India of Rs 8,240 crore in the last three years between 2016-17 and 2018-19. Other financial support includes government providing a guarantee of Rs 7,600 crore to Air India for raising new debt for payment of liability for FY19.
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