Government to split Air India into four entities ahead of sale

The core airline business comprising Air India and Air India Express, the lowcost overseas arm, will be offered as one company, and the process will be completed by the end of 2018, Junior Aviation Minister Jayant Sinha said in an interview on Monday. Its regional arm, ground handling, and engineering operations will also be sold separately in the same process. 

A successful sale of Air India, with $7.9 billion in debt, five subsidiaries and a joint venture, and a combined workforce of 27,000, is crucial for Modi, who wants to showcase his credentials as a reformist attempting to steer the state away from running businesses. 

The airline, which is surviving on a taxpayer-funded bailout, has strained government finances for decades, Finance Minister Arun Jaitley said last year that money spent on Air India could have been used for education.

“The aviation sector is a very fast growing sector, with really exciting opportunities for all participants, so we felt all of this will unlock growth and competitiveness of Air India group,” Sinha said. 

“We expect it to be a very bright future for its employees.” Sinha declined to name potential bidders but said management control will be retained by local investors. The government altered foreign investment rules last week, allowing foreign airlines to own as much as 49 percent of Air India. Investors’ interest will be sought by end of this month with details on Air India’s core and non-core debt and assets, he added.