Image used for representational purpose only. (File photo| PTI)
NEW DELHI: NEW DELHI: Government will not move further on Air India disinvestment in near future in the current circumstances. Ministry of civil aviation has said that due to volatile crude prices and adverse fluctuations in exchange rates, the present environment is not conducive to stimulate interest amongst investors for strategic disinvestment of Air India in immediate near future.
The ministry said that the issue of Air India disinvestment would be revisited once global economic indicators including oil prices and forex conditions stabilize.
In a reply to the Parliament, the ministry on Wednesday said that the Government remains committed to the disinvestment of Air India. In this regard, the Air India Specific Alternative Mechanism (AISAM) has decided to undertake near and medium term efforts to capture operational efficiencies and to improve the performance of Air India.
Moreover, to improve the financial health, the ministry has also planned to monetise non-core land and building assets.
Besides, it will separately decide the contours of the mode of disposal of the subsidiaries including Air India Engineering Services Limited (AIESL), Air India Air Transport Services Limited (AIATSL) and Airline Allied Services Limited (AASL).
Till the last date on May 31 this year, the national carrier did not receive any bid for disinvestment.
Officials said that probable reasons as analyzed by the Transaction Advisor Earnst and Young for non-receipt of bids inter-alia, are GOI 24% stake and corresponding rights, high amount of allocated debt, changes in macro environment, individuals not being allowed to bid, profitability track record, and bidders not being able to form a consortium within given time period.
NITI Aayog in its recommendations, on Strategic Disinvestment of the Central Public Sector Enterprises on May 12, 2017 had given the rationale for the disinvestment of Air India and has referred to the fragile finances of the company, among various other reasons. Air India has been incurring continuous losses and has huge accumulated losses. Further, NITI Aayog in its report on Air India has stated that further financial support in a mature and competitive aviation market would not be the best use of scarce financial resources of the Government.
Subsequently, the Cabinet Committee on Economic Affairs (CCEA), in its meeting held in July last year had given in principle approval for considering strategic disinvestment of Air India and its five subsidiaries and constitution of Air India Specific Alternate Mechanism (AISAM) to guide the process of strategic disinvestment from time to time.
