Govt asks Air India to put new flights, promotions on freeze

Govt asks Air India to put new flights, promotions on freeze

Even as the process for disinvestment of national carrier Air India is already set in motion, the government has asked the airline management to start new flights only if it is extremely necessary after due diligence of commercial interest.

The airline has also been asked to put a freeze on large-scale appointments and promotions.

The directive from Department of Investment and Public Asset Management (Dipam) came a week back in view of the impending privatisation, government sources said. A group of ministers (GoM) headed by Union home minister Amit Shah has already been reconstituted to carry on the process of disinvestment at the earliest. The GoM is expected to meet in the coming weeks to take the process forward, the sources said. Further, the government has appointed consulting firm EY to finalise preliminary information memorandum (PIM) for inviting expressions of interest (EoI) from prospective bidders.

Interestingly, the government in June did a flip flop over Air India's disinvestment when Union civil aviation minister Hardeep Singh Puri remarked in parliament that the present economic environment was not conducive for stake sale in Air India. With hours of the minister's remarks, the civil aviation ministry issued a statement saying that the inconducive environment was last year. However, things have improved now and the government plans to go ahead with privatisation, it said. Analysts claim that statements like this send out a wrong signal to the investors.

"Jet Airways' demise has made Air India's international business look far more attractive to investors as compared to the past. The government can chip in by helping Air India get those lucrative slots which will help it in gaining massive traffic in Europe, US and North America," an analyst said.

Last year the government failed to sell a 76% stake in the debt-laden carrier as the investors did not show any interest in the proposal as they found it unattractive.

Air India, with a total debt of about Rs 58,000 crore, is said to be bleeding around Rs 21 crore daily. The cumulative loss of the national carrier is about Rs 70,000 crore. In the fiscal ended March 31, 2019, the airline is estimated to have reported a loss of Rs 7,600 crore. Sources said the airline does not have enough money to pay salaries to its employees beyond October. The airline's salary outlay currently stands at around Rs 300 crore. There have already been delays in salary payments for the past few months.

Meanwhile, civil aviation minister Hardeep Singh Puri recently said that the government was not equipped to run Air India as the delayed bureaucratic process does not allow it to take decisions quickly as is required in the airline industry.

"Left to myself, I would all be interested entirely in supporting the public sector. But the question arises: Is the government equipped to run an entity like Air India, where operational decisions on a day-to-day basis have to be taken on the spot?" Puri said in Rajya Sabha.