Budget 2018: Air India sale to lead government's divestment target for FY19

The divestment of Air India is expected to find a special mention in the 2018 Union Budget. It's not just because the ball has finally started rolling on the sale of the national airline, but also because it will give a fillip to the Government's divestment target for the next financial year.

The NDA government has collected about Rs 55,000 crore in the present fiscal, against its target of Rs 72,500 crore. Reports say that the target for FY19 may rise sharply. The government is looking to divest its stake in nearly 40 companies in the next financial year.

Surely, Air India's sale will make up for a major chunk of that divestment target. During a recent aviation summit in Mumbai, experts said that Air India might get a valuation of up to $5 billion, or over Rs 30,000 crore.

Chief Economic Adviser Arvind Subramanian also said in an interview to a daily on Tuesday that privatising Air India is one of the reforms that needs to be completed in the next fiscal.

A start

Up to six players may put in their bids for Air India. According to Kapil Kaul, South Asia chief of aviation consultancy firm CAPA, four domestic airlines have shown interest in the government airline. These include IndiGo, SpiceJet, Jet Airways and Vistara.

Apart from them, Kaul said two non-aviation companies may also join the race. "These companies are looking for partners for funding," Kaul said.

Air India operates a fleet of Boeing and Airbus aircraft, and serves more than 90 domestic and international destinations. Apart from its real estate assets, potential bidders will also be interested in the airline's units specialising in ground handling and engineering.

Reports also say that the government is looking at the option to break-up Air India into four separate companies. While Air India and its low-cost arm Air India Express might be sold together, the airline's regional arm, ground handling unit and engineering operations would be divested separately.