"In-principle approval for Air India divestment has been given", Jaitley said at a press briefing after the Union cabinet met here. The GoM will also decide on the modalities of the proposed disinvestment, including the quantum of the stake to be diluted and ways to deal with the carrier's existing debt, Jaitley said.
The union members also highlighted that the airline had incurred huge losses because of "hasty decisions and wrong civil aviation policy of the Government of India" such as the purchase of 111 aircraft and surrendering of profitable routes to private carriers.
The airline, which was afloat thanks to a Rs 30,231 crore nine-year bailout programme approved in 2012, has about Rs 52,000 crore of debt.
"Air India's privatisation has been long overdue", said Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG. The low cost arm of state-owned Air India however saw its net profit fall from Rs361.68 crore in financial year ended March 2016.
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The cabinet will shortly consider a proposal to allow foreign airlines to pick up stakes in cash-strapped domestic carriers, local media reported on Monday, citing. Earlier in 2000, the then A B Vajpayee government had cleared the disinvestment of Air India but it could not go through following protests.
Experts say India's aviation sector holds vast untapped potential, with just 100 million of its 1.2 billion people taking to the skies past year.
On the overseas traffic to and fro India, it has a 17% share.
Air India has been reporting losses for at least four years, says the country's top auditor. Set up by Tatas, the carrier was made a public company and was rechristened as Air India.