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Government puts off Air India sale in an election year

Livemint logoLivemint 19-06-2018 Livemint

Air India planes are parked on the tarmac at the Terminal 3 of Indira Gandhi International Airport in New Delhi, India. India's federal cabinet has approved a plan to privatise its debt-ridden national carrier Air India. A statement from the finance ministry Wednesday, June 28, 2017, said that the government had given "in principle" approval to sell disinvest from the troubled airline which has struggled to emerge from the red as competition from a number of low-cost airlines has grown. (AP Photo/Kevin Frayer, File) © AP Air India planes are parked on the tarmac at the Terminal 3 of Indira Gandhi International Airport in New Delhi, India. India's federal cabinet has approved a plan to privatise its debt-ridden national carrier Air India. A statement from the finance ministry Wednesday, June 28, 2017, said that the government had given "in principle" approval to sell disinvest from the troubled airline which has struggled to emerge from the red as competition from a number of low-cost airlines has grown. (AP Photo/Kevin Frayer, File)

New Delhi: The government has decided not to go ahead with in an election year and will provide required funds for its operations, a senior official said on Tuesday. The decision comes less than three weeks after the proposed 76% strategic stake sale in debt-laden national carrier failed to attract any bidders. Air India will very soon get funds from the government for its day-to-day operations and will even place orders for a couple of aircraft, the government official said.

The decision was taken at the high-level meeting convened by finance minister Arun Jaitley on Monday. The meeting was attended by railway minister and Piyush Goyal, civil aviation minister Suresh Prabhu, transport minister Nitin Gadkari and other senior officials of finance and civil aviation ministries.

“The airline is posting operational profits. None of the flights go empty. With all the cost efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now,” the official quoted above said.

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The government is looking at turning around Air India to ensure that it makes profits on overall basis before going in for listing. “Certain conditions have to be met before listing a company. Once Air India fulfils those, we will go in for an initial public offering and subsequent listing,” the official said.

According to Sebi (Securities and Exchange Board of India) norms, a company has to post profit in previous three financial years before it can list itself in the stock exchanges.

“The focus is on improving operational efficiency. We will continue to boost employee morale, starting from the top level, to better the functioning of the airline. Funds would be provided as and when required,” the official added.

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The government had originally proposed to offload 76% equity stake in Air India as well as transfer the management control to the buyer. The buyer would have had to take over Air India debt to the tune of Rs 24,000 crore or the carrier along with more than Rs 8,000 crore of liabilities.

With inputs from PTI

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