The government has decided not to go ahead with the Air India stake sale in an election year and will provide the required funds for its operations, a senior official said today.
The decision comes less than three weeks after a proposed 76 percent strategic stake sale in the debt-laden national carrier failed to attract any bidders.
Air India will soon get funds from the government for its day-to-day operations and will also place orders for a couple of aircraft, the government official added.
The decision was taken yesterday at a high-level meeting convened by Union Minister Arun Jaitley. The meeting was attended by Piyush Goyal, who has been temporarily given the charge of finance ministry, Civil Aviation Minister Suresh Prabhu, Transport Minister Nitin Gadkari and other senior officials of finance and civil aviation ministries.
"The airline is posting operational profits. None of the flights go empty. With all the cost efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now," the official said.
The government is looking at turning around the company to ensure that it makes profits on overall basis before being listed.
"Certain conditions have to be met before listing a company. Once Air India fulfills those, we will go in for an initial public offering and subsequent listing," the source said.
As per SEBI norms, a company has to post profit in previous three financial years before it can list itself in the stock exchanges.
"The focus is on improving operational efficiency. We will continue to boost employee morale, starting from the top level, to better the functioning of the airline. Funds will be provided as and when required," the source added.
The government had originally proposed to offload 76 percent equity share capital of the national carrier as well as transfer the management control to private players. The buyer would have had to take over Rs 24,000 crore debt or the carrier along with over Rs 8,000 crore worth of liabilities.
However, the stake sale failed to attract any bidders when the bidding process got completed on May 31.