With over Rs 60,000 crore in debt, the Indian government is again in a process of selling its stakes off Air India. This of course isn’t the first attempt by the Indian government to disinvest Air India. Let us take a quick overview of the Indian’s government previous attempt at Air India disinvestment.

Back in 2001, under the ruling of Atal Bihari Vajpayee, the first attempt by the Indian government to disinvest Air India was made. In response to this decision, several foreign airlines showed their interest in purchasing part of Air India’s stake. However, many of them became instantly uninterested following the announcement that foreign airlines who wish to bid have to partner with an Indian-owned company. Many of the robust airlines pulled out leaving the Tata-Singapore Airlines which continued with the deal but decided to withdraw at the last moment. This indeed brought the first attempt of Air India disinvestment to an abrupt end.

Air India continued with its operations and tried several ways to keep the airline in the skies. Merging with Indian Airlines back in 2007 was one of the methods employed. Eventually, in 2018 the Indian government placed Air India for sale while keeping only 24% equity. This decision was made as the airline has accumulated over Rs 50,000 crore in debt at the time as well as several other liabilities. At this, the airline did not receive a single bid.

Finally, at the beginning of 2020, the Indian government once again brought Air India to the market with a strategic modification on the bidding terms. This time, the government is ready to give out 100% of its stake. Part of the agreement involves potential investors paying Rs 23,286 crore of Air India’s debt. However, this was modified in October allowing investors to decide how much of Air India’s debt they can take responsibility for. Investors are allowed to bid on enterprise value, and whoever wins will still need to invest further to put the airline in shape.

Presently, there has been significant progress in Air India disinvestment. The government has selected the Tata Group and Ajay Singh, MD of SpiceJet as its final bidders. These two will have to place a final bid in a couple of weeks for the process to be completed.

Air India disinvestment is indeed a huge step for the Indian government. Nevertheless, it is a necessary step required to prevent Air India from shutting down completely.