The government is unlikely to go for any dilution of its stake in national carrier Air India in the near future and divestment may be “looked at” once the airline improves its balance sheet.
Noting that Air India has seen a marked improvement in its on-time performance, which is being monitored by the Civil Aviation Ministry on a day-to-day basis in the last few weeks, highly-placed sources said that the reason for flight delays like shortage of flight and cabin crew is being addressed by the management.
“As part of its turnaround plan, Air India will be getting equity (Rs 30,000) crore for a certain period. That process is still being completed. So right now Air India not in the divestment list,” a source said.
Ruling out even a “rethink” by the government on the national carrier’s partial or complete privatisation at this stage in the face of staggering losses, the sources said that disinvestment cannot happen unless the huge debt and mounting losses get wiped out from the balance sheet.
The government as part of the airline’s turnaround plan had approved a Rs 30,000 crore financial package for 10 years in 2012 with certain riders.
At present, its balance sheet has a whopping Rs 30,000 crore combined losses besides another Rs 40,000 debt.
“But over the last two years, there profitability has improved, so if it can be further improved, it (the divestment) can be looked at,” the source said.
Once the desired OTP is achieved, it would result in reduction in variable costs and a consequent improvement in profitability, the sources said.
Heavy Industries Minister Anant Geete had recently said that the government has plans to shut down five of the 65 sick public sector undertakings (PSUs).
According to the government, Air India accumulated losses of Rs 5388 crore, Rs 5490 crore and Rs 7559 crore in years 2013-14, 2012-13 and 2011-12 respectively, the government had recently said.
“Air India has improved its overall on-time performance in the last few weeks with domestic average OTP standing at 85-90 per cent and international at 70-75 per cent respectively, which needs to be improved further. However, some domestic airports have reported even 100 per cent OTP in these weeks,” the source said.
Noting that Air India has already started hiring of the flight and the cabin crew to meet the shortage, which is expected to be met by July, the sources said that other issues such as maintenance and preventive maintenance was also being looked in.