Modi set to go ahead with sale of Air India
Prime Minister Narendra Modi is expected to give the go-ahead for the government to sell off loss-making Air India. It now has more than $8 billion of debt — equivalent to the value of the company.
Air India was founded in 1932 as Tata Airlines by Jamsetji Tata, before being nationalised in 1953. The government merged domestic Indian Airlines with Air India in 2007 — a controversial decision currently being probed by the Central Bureau of Investigation (CBI).
Since the merger, the airline has struggled to keep up with cheaper no-frills rivals and has made pre-tax losses for eight years in a row. Air India’s share in the domestic aviation market has shrunk to just 14.1 percent — a distant third behind high-flying Indigo (39.8%) and Jet Airways (15.5%). On the international sector, it still has a significant share of 25 percent but continues to lose heavily on these routes.
In March, auditors found the group had understated its operating losses by nearly $1bn between 2012 and 2015.
The Press Trust of India reports that the CBI has launched a criminal investigation into alleged irregularities in a 2006 decision authorising Air India to buy 68 Boeing jets for $11 billion.
Ministers still have to decide several details, including whether they retain a stake in the company to take advantage of any turnround, and whether they break the company up to make it easier to sell.