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Air India's divestment is ‘temporarily’ on hold, says CMD

The government has decided to keep the divestment of Air India (AI) at the back burner till the state carrier reduces the amount of debt it has on its books of accounts.

“The divestment has been put on hold for the time being,” Pradeep Kharola, chairman and managing director, Air India has said.

He said that the airline has been incurring losses, especially due to high crude oil prices, which made the bid unattractive.
“All the airlines have not done well in the past six months… Also, because the crude oil price is so high, it was thought that it was not the right time to divest it,” he said.
The government had set up a ministerial committee, headed by finance minister Arun Jaitley, to suggest ways to divest the airline.

 The government had decided to sell 76 percent of its stake in the national carrier and invited bids for the same in May 2018.

Going into the reasons why nobody came forward to own the ‘Maharaja of the Skies’, it was pointed out, among other things, that of Air India’s total Rs 48,781 crore debt, bidders will have to take over debt of Rs 33,392 crore.

In July 2017 itself, the local media reported that the primary reason for Air India’s disinvestment was the government’s inability to cope with its debt of ₹52,000 crore. Around ₹22,000 crore of the total debt accounts for aircraft acquisition loan and the rest is related to debt for meeting its daily and operational expenses. The then Air India Chairman and Managing Director Ashwani Lohani recently said the “mountain of debt” which the present management “acquired appears insurmountable and is at the root of all the problems.”

Another significant reason financially was that 40 percent of AI’s 27,000 employees are permanent staff   which means a huge financial burden.

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