NEW DELHI: While Air India has failed to attract a buyer in the last two months, aviation consulting firm CAPA India has said that the Central government should divest 100 per cent stake in the national carrier.
“The government should divest 100 per cent even if it means giving up future upside, because if retaining a stake is blocking the entire sale, it is saddling the government with billions of dollars of red ink,” CAPA India said.
“Far better to cut losses now and maximise proceeds today, especially as there is no certainty as to where the airline business cycle will be tomorrow. A stronger, restructured Air India can deliver significant indirect benefits to Indian economy by stimulating tourism, trade and job creation that far outweigh any notional future upside on the sale of 24 per cent equity in the airline in future,” said a CAPA report.
According to the firm, Air India continuing under the government ownership will lead either to an “indefinite drain on the exchequer or to the closure of the airline at a great cost to employees, taxpayers, and to the economy.”
“CAPA India, therefore, supports the divestment process and urges the Government of India to put aside this setback and push ahead with the target of concluding the transaction before the end of financial year 2018-19, after taking on board investor feedback to structure a more realistic offer,” said the report.