A panel of officers — which had been tasked to look into the options proposed by the transaction advisor, Ernst & Young — is also not in favour of reducing the debt by Rs 23,000 crore, sources told TOI. Some of the potential bidders had also sought clarifications on this. On September 18, TOI had reported on the options.
While the final modalities have to be prepared by the core group on disinvestment headed by cabinet secretary Rajiv Gauba, before a green-light from a ministerial panel, the groundwork is done by the inter-ministerial group (IMG). Top government sources indicated that the finance ministry is keen on department of investment and public asset management (DIPAM) moving ahead with the disinvestment programme of public sector companies in line with the Cabinet decision. Fresh proposals are unlikely to be taken up immediately, they said.
Winding up the airline was not an option, given that it has nearly 15,000 employees, apart from a vast infrastructure and assets and a closure will result in further value erosion. Aviation minister Hardeep Puri has several times said the choice “is between privatising and closing down” AI. The government has extended the deadline for submission of interest to October 30.
According to sources, the IMG was of the view that the equity value had come down over the last one year due to Air India losing market share, with Covid-19 disruptions further impacting its profitability. At the same time, the debt burden had only mounted. As a result, the government expects that assigning a pre-fixed debt level may turn out to be detrimental and could further reduce competition.
“Fewer the conditions, the better it is,” said an officer, adding that the government is keen to exit the national carrier, which has been a drain on the exchequer for several years.