Mehar Singh/DELHI Andrzej Jeziorski/SINGAPORE
The Indian Government has cleared the proposed sale of 60%of Air India, four months after its basic approval for a similar 51% sell-off of Indian Airlines.
According to Air India, the Cabinet's Disinvestment Committee has approved a proposal that 40%of the airline should go to strategic partners, 10%to foreign and domestic institutions and the public, and 10% to employees. The foreign strategic partners holding cannot exceed 26%.
Disinvestment minister Arun Jaitley says that, once a shortlist of potential strategic partners has been prepared, a shareholders' agreement will be drafted before bids are called in. The agreement will also specify the degree of management control to be granted to the strategic partner.
No schedule has been announced for the privatisation, but the Government is expected to appoint an adviser within 90 days to help it push through the scheme. The same process is underway at Indian Airlines, where a 26% stake is earmarked for strategic partners, with the public, domestic financial institutions and employees being offered the remaining 25%. Foreign airlines are being excluded from the Indian Airlines sell-off.
According to provisional figures, Air India predicts a net loss of about Rs800 million ($18 million) in the financial year up to the end of March 2000, compared with a Rs1.74 billion ($40 million) loss the previous year. Its financial fortunes appear to be on the mend with the airline for the first time in five years declaring an operating profit of Rs.18.6 million in April.
The poor performance of Air India is in sharp contrast to its domestic partner Indian Airlines, which has reported the highest profits in its 46-year history. Outgoing chairman and managing director Anil Baijal reported a net profit of over Rs 600 million ($13.5 million) for the year to the end of March 2000, but warned of lower profit figures this year at around Rs260 million.
Source: Flight International
