Air India’s Divestment The Only Option: Aviation Minister

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Indian Aviation Minister Hardeep Singh Puri on Thursday said that divestment of loss-making Air India is the only option the government has.

He said that the Government is not in a position to support Air India.

The divestment process for the Air India was initiated on 27th January and the last date for bids was kept on 17th March, later this was extended till 30th April.

This was further extended to 30th June by 2 months.

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However, on 28th June, the government again extended the deadline to bid for Air India till 31st August because the COVID-19 pandemic has disrupted economic activities globally.

This was the third time when the deadline was extended.

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Puri at a press conference said,

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“Anyone who is familiar with Air India, including the people who work there, realise that besides privatisation, we are left with no other option.

This is for the simple reason that airlines the world over have been under strain pre-Covid and the pandemic has introduced a new element.

The Air India CMD is conducting detailed discussions with all sections of the company, like pilots, engineers, etc,”

However, he assured that the privatisation will be done keeping in view the interest of all the sections involved.

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He said that the national carrier is working on enhancing economic efficiencies and rationalizing operations.

Air India chairman and MD Rajiv Bansal said the company is working on increasing revenues.

“At the same time, we are trying to contain costs, which is largely through three steps. We can reduce our debt, lease rentals, staff costs, and operating costs.

We are negotiating with lessors to reduce aircraft rentals.

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We have made some initial headway and hope that even the current global situation, we will be able to negotiate an improved deal,” he added.

He said Air India has also reduced its employee costs and laid off some staff who were working with it after their retirement.

We have brought in some policies that will cut down costs. We are in negotiations with pilots, cabin crew, etc. We are also looking at cutting costs by renegotiating with hotels and transport providers,” he added.

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The CMD said there were people who had retired. There may be people who are on contracts that have expired. Then there may be others. What are the options with us?”

The minister said cuts will be across the board, but it will be determined by the CMD and the board.

The aviation sector has been hit hard by the coronavirus pandemic, with airlines canceling flights and announcing pay cuts for employees.

The COVID-19 pandemic and subsequent lockdowns have disrupted economic activities globally.

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After its unsuccessful bid to sell Air India in 2018, the government in January 2020 again started the divestment process and invited bids for selling 100% equity in the state-owned airline, including Air India’s 100% shareholding in AI Express Ltd and 50% stake in Air India SATS Airport Services Private Ltd.

(Via – Finance Post)


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