Tuesday, June 12, 2018

After failed disinvestment bid, govt considers Air India overhaul Lufthansa style

New Delhi: Days after Air India’s failed disinvestment bid, the government is contemplating a complete overhaul of the national carrier into a publicly traded company run by an independent corporate board, in which the government would keep only a tiny share.

In an interview with ThePrint, Niti Aayog vice chairman Rajiv Kumar said the failed bid has given the government time to relook available options with respect to the airline’s disinvestment.

In what could be a significant change in the method of disinvestment, Air India could move away from the strategic disinvestment envisioned in the first bid where 76 per cent of the equity shareholding would have gone to a private player.

“It gives a chance to think once again whether we want to do something like what Lufthansa has done. Which is to have a very widely held public limited enterprise,” Kumar said.

In the mid-90s, the German government reduced its stake in the national carrier from over 51 per cent to 35 per cent. Several separately operated units were turned into individual group companies. And by 1997, the carrier was finally privatised.

While it is only an idea under consideration at the moment, if materialised, the shares of Air India will be publicly traded. The government will only have a minority stake in the airline which will be run by an independent corporate board.

“We can put in place a professionally managed running board which is very arm’s length from the government and run the Air India like that (sic),” said Kumar. “It has assets which are quite prized so there is no reason for us to not be able to let it work, to get value out of it. And to assume that we can’t find a board like that or a competent management like that is really not right.”
11/06/18 Kaveesha Kohli/The Print