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Air-India to be privatised by March, says Shourie

India said on Tuesday that the privatisation of national flag carrier Air-India can be completed by the end of 2000-01 (April-March).

"The advisers have informed the government that the privatisation of Air-India can be completed by the end of this financial year," Divestment Minister Arun Shourie told a seminar on privatisation.

New Delhi has offered to sell 40 per cent of its loss-making national carrier Air-India. Foreign carriers can bid up to 26 per cent individually, or up to 40 per cent if they team with an Indian partner.

The government has placed no price tag on the airline, saying it wants to see the bids first.

The Indian government's partial sale of Air-India is its highest profile initiative to date in a privatisation process which has been slow to get off the ground.

The government is also offering 26 per cent of domestic carrier Indian Airlines for sale to local companies, non-resident Indians and overseas corporate bodies, or foreign companies which are majority-owned by expatriate Indians.

Foreign companies, with the exception of foreign airlines, are allowed to purchase 40 per cent of the 26 per cent stake offered for sale. Bidding for both airlines ended on Friday.

Big name suitors

Air-India's privatisation has attracted interest from leading international carriers.

Singapore Airlines together with India's largest private sector conglomerate, the Tata group, has bid for a 40 per cent stake, and other suitors include Dubai's Emirates airline and the Air France and Delta Airlines' SkyTeam alliance.

Australia's Qantas Airways Ltd said on Sunday it was a technical advisor, with alliance partner British Airways, to a consortium bidding for an Air-India stake, but both did not plan to participate in the offer.

An airline spokeswoman said the bidding group, made up of Indian companies, was led by London-based steel magnate Laxmi Niwas Mittal, who controls Ispat International NV.

Mittal is the second expatriate Indian to have bid for the airline.

Britain-based Hinduja Group, owned and run by four billionaire brothers, have also put in bids for Air-India.

Air-India's pilots union is also bidding for a 40 per cent stake.

Air-India has racked up losses of more than Rs 10 billion in the last five years and cut its network by 40 per cent in line with the scope of its 23-aircraft fleet. But analysts say the airline is attractive because it holds some lucrative bilateral and traffic rights to Europe, Africa and South-East Asia.

It also has a foothold in the fast-growing Indian travel market and international airlines, keen to break in, cannot ignore this opportunity.

Air-India showed the first signs of a turnaround in the last financial year (April 1999- March 2000) when it posted an operating profit of Rs 760 million.

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