WEEKS after the Air India chief stated that the airline's financial situation was "grossly untenable" for sustaining operations, Indian civil aviation minister Hardeep Singh Puri clarified on Tuesday (31) that the national carrier, which is incurring a loss of Rs 200 million (£2.12m) million- Rs 260m daily, will keep on running till it is privatised.
"Air India is running. Air India will keep on running. But Air India has to be privatised because it is incurring a daily loss of Rs 200m-Rs 260m. This is taxpayer's money that can be more profitably spent," he told reporters in New Delhi.
While disinvestment-bound Air India's net loss in 2018-19 was around Rs 85.56 billion, its current total debt is around Rs 800bn.
"We made an attempt two years ago. That attempt proved to be less than successful. We have learnt from that experience. It is our endeavour now that we will be issuing an expression of interest in the coming few weeks. Hopefully, sooner than later," Puri said.
"We want an Indian entity, for strategic reasons, to be acquiring the company," the minister added.
In 2018, the government had proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players.
However, the offer failed to attract any bidder when the deadline for initial bids closed on May 31, 2018. Therefore, the Centre re-started the disinvestment process this year.
In a letter to the Ministry of Civil Aviation earlier this month, Air India Chairman and Managing Director Ashwani Lohani said: "It also needs appreciation that the overall financial situation is grossly untenable and the airline may not be able to sustain physical operations in the absence of immediate government intervention and support that we have been repeatedly requesting for in the recent past."
Talking to reporters, the minister said on Tuesday that the government is not a "slave or victim of certain deadlines" when it comes to national carrier's privatisation.
"We are doing it seriously. We had a meeting yesterday for several hours. We will have a meeting of AISAM (Air India Specific Alternative Mechanism) in the coming weeks. Then, we will take the process forward," he added.
As the airline, over a period of time has accumulated a debt that "could be described as unsustainable", the minister said, the Centre has to "now do privatisation" and there are "no two views on it".
The Centre plans to divest its entire stake in Air India this time so as to make it attractive for private entities.
"On its own, it (Air India) can make a profit also. But if you have to pay interest on Rs 800bn outstanding debt, obviously, whatever profit you make, it is not going to go towards the thing (company)," he added.
A government that hands out money which is taxpayer's money to any entity wants to be clear in its mind as to what the ultimate utilisation of the money is going to be, he said.
"If you were to make out a case that you have to go on pouring money and the business entity will go on incurring losses...obviously the government would be reluctant to do that," he added.
"Therefore, the statement that I had made in Parliament - again where I was misquoted - was that for us it is not an option and it has to be privatised. So, that is the correct picture," he added.
Bobby Bawa