Cabinet clears Air India's privatisation, trade unions cry foul

The Cabinet today cleared disinvestment of beleaguered national airline, Air India which has floundered amid stiff competition from no-frills rivals and reported at least seven years of losses.

Announcing the decision, Finance Minister Arun Jaitley said an in-principal approval for divestment of Air India has been taken, but did not say if it will be an outright sale or partial divestment.

"The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, has given its approval to fourth tranche recommendations of NITI Aayog on strategic disinvestment of CPSE (strategic disinvestment of Air India and five of its subsidiaries) based on the recommendations of Core Group of Secretaries on Disinvestment (CGD)," he said.

A Civil Aviation Ministry note for stake sale in Air India was considered by the Cabinet today.

The airline, which was afloat thanks to a Rs 30,231 crore nine-year bailout programme approved in 2012, has about Rs 52,000 crore of debt. It is hampered by debt and servicing costs, which largely eroded its recovery.

Air India, which made an operating profit of about Rs 100 crore in 2015-16 on back of drop in oil prices, but posted a net loss of Rs 3,840 crore, has seen its market share shrink to 12.9 per cent from 35 per cent a decade back.

Asked about how soon the decision on Air India could come from the Group of Ministers, Jaitley said "in this government process is very fast".

"All the aspect would be decided by the group. The Prime Minister would constitute the group...obvisouly the last word is of the Cabinet," he said.

The group on Air India-specific Alternative Mechanism headed by the finance minister will include Civil Aviation Minister and other concerned ministers.

The group will guide the process on strategic disinvestment from time to time and decide treatment of unsustainable debt of Air India, hiving off of certain assets to a shell company and demerger and strategic disinvestment of three profit-making subsidiaries.

Besides, it will also decide on the quantum of disinvestment in Air India and the universe of bidders.

Meanwhile, an employees' union of Air India today met NITI Aayog chairman Arvind Panagriya and demanded that the government waive the airline's debt, instead of selling it to a private player.

However, the move may have come a little too late as hours later the Union Cabinet gave its in-principle approval for the disinvestment of Air India.

NITI Aayog, the government think tank, had earlier proposed privatisation of Air India because of its debt of Rs 52,000 crore.

"We request you to waive Rs 30,000 crore and give opportunity to Air India management to keep flying the flag of national carrier," according to a letter the Air India Employees' Union submitted to Panagriya.

Expressing concerns about the uncertain fate of 25,000 employees of the airline, the union representatives have also demanded that if Air India is privatised, their salary dues should be cleared.

The union members also highlighted that the airline had incurred huge losses because of "hasty decisions and wrong civil aviation policy of the Government of India" such as the purchase of 111 aircraft and surrendering of profitable routes to private carriers.

They also add that appointing retired employees on last- drawn salary has affected the airline adversely as well as recruiting sports personalities such as Suresh Raina, Yuvraj Singh and Harbhajan Singh cost the airline several crore rupees.

Another employees union, Air Corporation Employees Union, is planning to seek an appointment with the Prime Minister's Office.

Seven unions of Air India employees had earlier warned the government of large-scale protests if the NITI Aayog proposal to privatise the national carrier was approved.