India’s flawed attempt to sell off flag carrier Air India will not be repeated – at least for time being.
The government has shelved plans for a majority stake sale and will evaluate all other options.
Meanwhile the government will need to likely spend billions more to prop up the ailing carrier which has being delaying workers’ salaries.
Minister of state for civil aviation, Jayant Sinha says a number of other options are being looked at.
"We have to move forward and consider other alternatives… as market and industry circumstances change, we will evaluate all alternatives. If need be, we can restart [the privatisation process] depending on what is appropriate given market circumstances," Sinha said.
The airline will continue to be state funded until a Plan B is finalised at least.
"Whatever Air India’s financial requirements or liquidity requirements are, we in the government are committed to supporting it and will continue to support it as we have done in the past."
The airline had to secure a loan of $150 million recently for immediate working capital needs.
The governments offer for a 76% stake in Air India didn’t attract a single serious bid.
Airlines and aviation industry investors are tightening belts due to market volatility and surging oil prices.
The government may well hope to ride out the uncertainty and re-visit the option at a later time.
Sinha said the government remains committed to selling off AI but for now it needs to create the conditions for a more attractive sale by cutting inefficiencies.
"Air India is making profits at an operating level. The losses are due to legacy issues of the previous government. We do not want the airline to lose out on the market share," he said.
