Government may exit Air India, sell its residual stake to LIC
After ESOPs are given out, the government’s stake will fall to around 20%. The Centre plans to sell this to state-owned insurance firms to hold have no interference in AI’s operations
April 05, 2018 / 10:20 AM IST
The Centre may completely exit from Air India and sell its residual stake to Life Insurance Corporation of India (LIC) and other financial institutions of the country, according to a report by Business Standard.
The government is planning to sell 76 per cent of equity in the national carrier, 50 per cent stake in ground handling and hospitality firm AISATS and 100 per cent stake in its subsidiary Air India Express.
The move could also help address investors’ concerns over the possibility of the government’s interference in the airline’s operations after its sale.
The government is about to begin discussions with LIC and other state-owned insurance companies to sell its residual stake in the flag carrier after employee stock ownership plans (ESOPs) are meted out to permanent employees, the report suggests. Moneycontrol couldn’t independently verify the report.
Also read: Air India disinvestment: Taking off, finally! This carrier is a probable candidate for buying the stake
According to the report, post the ESOPs, the government’s stake will fall to about 20 per cent.
“After creating the ESOP pool, we will reach out to the board of the financial institutions to discuss selling our residual shareholding," an official told the newspaper, adding that the Ministry of Civil Aviation will have little hold over the airline with the financial institutions holding stake.
Air India has debt of over Rs 50,000 crore on its books, much of which will have to be absorbed by the government to attract private interest.