Govt needs to infuse Rs 3,000 cr in Air India as sale to get delayed: CAPA

In January, the government restarted the divestment process of the carrier and invited bids for selling its 100 per cent stake in both Air India and Air India Express

The government's plan to privatise flag carrier Air India will be further delayed and it will have to infuse up to Rs 3,000 crore to ensure continuity of operations till the sale process gets over, the Centre for Pacific Aviation (CAPA) said on Wednesday.

The government has already extended the date of submission for expression of interest to April 30 from March 17 due to the ongoing coronavirus outbreak.

In January, the government restarted the divestment process of the carrier and invited bids for selling its 100 per cent stake in both Air India and its low-cost international budget arm Air India Express besides entire 50 per cent holding in ground-handling joint venture AI-SATS.

"The privatisation process for Air India will be further delayed. The EoI submission date has already been pushed back by six weeks," CAPA said in its latest report -- Impact of COVID-19 on Indian Aviation -- released on Wednesday.

Due to this delay, the government will need to commit "significant" and "immediate" interim funding of $300-400 million for the national carrier, to ensure that it is able to operate at least in its current condition until such time as the sale transaction is concluded.

Air India pilot unions - Indian Pilots Guild and Indian Commercial Pilots Association- on Monday wrote to Minister of State for Civil Aviation Hardeep Singh Puri, seeking immediate financial assistance to the airline in view of the situation arising out of the coronvirus outbreak.

CAPA, in its report also stated that the government must also have a fall-back plan to regroup and continue to operate the airline for the medium-term if the privatisation process is unable to proceed.

After its unsuccessful bid to sell Air India in 2018, the government this time decided to offload its entire stake. In 2018, the government had offered to sell its 76 per cent stake in the airline.