The Indian government of prime minister Narendra Modi has decided to sell the country's indebted and loss-making carrier, Air India.

According to a report in the Financial Times, the carrier is currently "labouring under around US$8bn worth of debt, which officials say makes up the entire enterprise value of the company, with
its equity worth close to nothing."
In March, India’s national auditor found the company had understated its operating losses by nearly US$1bn between 2012 and 2015. Ministers have tried to privatise the airline before, but their
plans have so far come to nothing.
Earlier selling attempts failed
In 2001, the government of Atal Behari Vajpayee nearly succeeded in selling the airline to a joint venture between Tata Group and Singapore Airlines, but Singapore Airlines backed out at the last
minute, the FT report said. Tata and Singapore Airlines currently jointly run Vistara, a domestic carrier, while Tata is also in a joint venture with Air Asia.
Meanwhile, before a formal and detailed sale can be announced by the government, a specially selected Group of Ministers (GOM) will have to decide on the modalities of Air India's disinvestment.
Announcing this earlier this month, Finance Minister Arun Jaitley said that he will head this GoM, which will comprise Civil Aviation Minister A Gajapathi Raju besides some other ministers.
Selling terms still unclear
Media reports in India said that three sales options are officially being considered: a 100% sell-off, a 74% stake sale or a 51% stake sale, meaning that in any scenario, the government will
cease to be a majority owner of the airline.
However, in order to get maximum value, another option could be to sell just the airline and dispose of the carrier's five subsidiaries: Air India Charters Ltd, Air India Transport Services Ltd
(ground handling subsidiary), Air India EngineerinG Services Ltd (MRO subsidiary), Hotel Corporation of India and Alliance Air.
Will QR invest in Air India?
Following the disinvestment announcement, sources said that Air India’s former owners, the Tatas could be interested in acquiring a stake, while India's biggest airline, IndiGo, earlier this
month said that it was keen to buy Air India's international arm and low-cost division Air India Express rather than the whole business in case the flag carrier would be sold.
As Etihad Airways already owns a 24% stake in Jet Airways, another suitor could be Qatar Airways, which reportedly has been circling India for a possible airline venture for sometime now.
If so, Air India will most likely drop out of the Star Alliance (United, Lufthansa, ANA; Singapore Airlines) and become a member of the Oneworld club, led by British Airways and American
Airlines.
Nol van Fenema
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