Air India weighs options to cut govt stake to 51%

Air India is in the process of evaluating several options to bring down the government's stake once it turns profitable. The national carrier expects to turn profitable in 2018-19, two years ahead of the original turnaround target of 2020-21 through better revenue generation and restructuring of the Rs 10,000-crore term loans with government guarantee backed non-convertible debentures.

One of the options being considered is conversion of debt into equity such that the government's stake comes down to 51 per cent. Aviation ministry officials said in every internal meeting of Air India, privatisation was discussed at length, though there is no clarity on how the airline plans to rope in private investors. Air India has total debt of around Rs 50,000 crore.

State Bank of India is lead banker in the 26-member consortium to Air India and includes Punjab National Bank, Bank of Baroda and Central Bank of India.

According to sources, the lenders might be asked to exercise this option at a stage when the airline clocks better performance. "There are several plans which include asking the banks to convert debt into equity but that will work out only when the airline is profitable," said one official. However, he said the plan was at a very nascent stage and nothing has been finalised.

Air India