State-run Air India Ltd should be made profitable before it is privatized so that the government can fetch a better value for the loss-making national carrier, said the vice-chairman of federal policy think tank NITI Aayog Rajiv Kumar.
The suggestion comes at a time when the government is keeping the carrier afloat with doses of capital infusion after a failed attempt at privatization in May highlighted investors’ discomfort with the sale conditions and their aversion to buying a loss-making company at a time of high jet fuel prices. Kumar said there could be two approaches to disinvestment in loss-making state-owned enterprises. The first is to turn around the company with professional management so that its valuation increases.
Air India has several assets whose value has not yet been discovered due to the company’s distressed financial situation. Kumar said the government should bring in a professional board that can run the carrier competitively before it decides to dispose the assets. “That is how these assets will fetch maximum value. This approach may very well be tried on Air India,” he added.
Air India had accumulated debt of ₹48,781 crore at the end of financial year 2016-17. Although loss-making, its net losses before exceptional and extraordinary items have been steadily narrowing in the four years until FY17, according to company documents.